Myth: Assessed value should be similar to market value.
Reality: While most states uphold the suggestion that assessed value is the same as estimated market value, this commonly is not the case. There are times when interior remodeling has been done and the assessor is not aware of the improvement or properties in the neighborhood have not been reassessed for a good length of time, it may vary widely.
Myth: The value of a property will be different depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the report and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement value of the home should be on par with the market value.
Reality: The way market value is derived is based on what a buyer would likely pay a willing seller for a home without being under influence from any outside group to buy or sell. The dollar amount necessary to reconstruct a home is what shows the replacement cost.
Myth: There are specific ways that appraisers use to find the cost of a home, like the price per square foot.
Reality: Appraisers complete a detailed analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: In a strong economy - when the sales prices of homes in a given county are reported to be increasing by a certain percentage - the values of individual houses in the vicinity can be expected to rise by that same percentage.
Reality: Any value an appraiser derives in regards to a specific home is always individualized, based on certain factors concluded from the data of comparable properties and other considerations within the home itself. It makes no difference if the economy is robust or poor.
Myth: You can generally tell what a home is worth simply by looking at the exterior.
Reality: There are a multitude of different variables that conclude property value; these factors include location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from just inspecting the home from the outside.
Myth: Considering that the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Reality: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. However, consumers have to be supplied with a copy of the appraisal report upon written request, because of the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in their appraisal so long as it exceeds the requirements of their lending agency.
Reality: A consumer should definitely look through their document; there could be some questions or some worries with the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a valuable record for future reference, comprised of useful and often-revealing data - including, but not limited to, 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: Appraisers are hired only to estimate home values in home sales involving mortgage-lending transactions.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: There's no reason to get an appraisal if you get a home inspection.
Reality: An appraisal report does not serve the same purpose as an inspection report. The appraiser finds an opinion of value in the appraisal process and resulting appraisal. The purpose of a home inspector is to assess the condition of the home and its major components, then compose a report on their inspection.