Common myths about appraising

Legally, a real estate appraiser has to be state certified to create legitimate appraisal reports for federally-backed sales. You also have the right to acquire a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser must be exactly the same as the market value.

Fact: While most states support the idea that assessed value approximates estimated market value, this usually is not the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are prime examples of why this occurs.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the cost of the house will vary.

Fact: The appraised value of the house does not affect the pay of the appraiser; as a result, the appraiser has no vested interest in the value of the home. This means that he will render services with impartiality and independence regardless for whom the appraisal is conducted.

Myth: Market value should equate to replacement cost.

Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a home without being under pressure from any external party to buy or sell. If the property were rebuilt, the dollar amount necessary to do so would make up the replacement cost.

Myth: There are certain ways that real estate appraisers use to determine the opinion of value of a property, such as the price per square foot.

Fact: An appraisal is an assertion of data concluded from the property's size, location, proximity to some facilities, the condition of the home and the price of recent comparable sales. You can rely on Herrin Appraisal Company's staff to be honest in assessing this information.

Myth: In a strong economy - when the worth of properties in a given region are found to be increasing by a particular percentage - the worth of individual houses in the area can be expected to rise by that same percentage.

Fact: Any worth at which an appraiser concludes concerning a specific home is always individualized, based on certain factors pulled from the information of comparable houses and other considerations within the home itself. It makes no difference whether the economy is robust or bad.

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Myth: Just seeing what the home looks like on the outside gives a good idea of its cost.

Fact: House worth is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from just viewing the property from the outside.

Myth: Because the consumer is the party who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report. Consumers must be given a version of the report through request due to the Equal Credit Opportunity Act.

Myth: Consumers need not worry about what is in their report so long as it satisfies the requirements of their lending agency.

Fact: It is almost imperative for home buyers to peruse a copy of their appraisal report so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an report that can be useful to the home buyer in the future, such as the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the proximity.

Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the price of a property during a sales transaction involving a lending agency.

Fact: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is the same as a home inspection.

Fact: Appraisal reports have almost nothing in common with a home inspection. The task of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report. A home inspector analyzes the condition of the home and its main components and reports their findings.

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