Common myths about appraising
Legally, an appraiser needs to be state certified to create legitimate real estate appraisals for federally-supported sales. You also have the right to receive a copy of the completed appraisal from your lender. Contact Piscitelli Appraisal Service if you have any concerns about the appraisal process.
Myth: Assessed value generally will be equal to market value.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why this occurs.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the appraised value of the home will vary.
Fact: The appraiser has no personal interest in the result of the appraisal report and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will approximate replacement cost.
Fact: Market value is derived from what a willing buyer would likely pay a willing seller for a certain house, with neither being under undue influence to buy or sell. Replacement value is the dollar amount required to reconstruct a house in-kind.
Myth: Appraisers use a formula, like a certain price per square foot, to figure out the value of a house.
Fact: Appraisers make a full analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.
Myth: When the economy is robust and the sales prices of properties are found to be rising by a certain percentage, the other houses in the proximity can be expected to rise based on that same percentage.
Fact: Worth appreciation of a certain home has to be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It makes no difference whether the economy is robust or on the decline.
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Myth: Just examining what the home looks like on its exterior gives an excellent idea of its cost.
Fact: There are a multitude of different variables that determine property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found just by inspecting the house from the outside.
Myth: Because the consumer is the one who provides the money to pay for the appraisal 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 lending agency - unless the lender "releases its interest" in the document. Home buyers must be provided with a version of the report through request because of the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even concern themselves with what the report contains so long as their lending institution is satisfied.
Fact: Only if home buyers look at a copy of their appraisal can they ensure its accuracy and possibly need to question the result. 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 will probably 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the worth of a property during a sales transaction involving a lending company.
Fact: Depending upon their qualifications and designations, appraisers can and will perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection report.
Fact: Appraisal reports are definitely not the same as a home inspection report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through producing the report. House inspectors will compose a report that will determine the condition of the house and its major components and possible damage.