Common myths about appraising
Legally, an appraiser needs to be state certified to create substantiated appraisal reports for federally-related transactions. Also by law, you are allowed to demand a copy of the completed report from your lending agency. Contact Piscitelli Appraisal Service if you have any questions about the appraisal process.
Myth: Market value will always be similar to the assessed value of the property.
Fact: While most states back the idea that assessed value is the same as estimated market value, this often is not the case. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are exact examples of why the price can vary.
Myth: The buyer or the seller often will have an influence in the cost of the home depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is written.
Myth: The replacement value of the house will be is on par with the market value.
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 group to purchase or sell. If the home were rebuilt, the dollar amount necessary to do so would form the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the cost of a home.
Fact: There are many differing processes that an appraiser will use to make a full analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.
Myth: In a robust economy - when the values of properties in a given region are reported to be appreciating by a certain percentage - the prices of individual houses in the vicinity can be expected to appreciate by that same percentage.
Fact: Value appreciation of a certain home has to be concluded on an individualized basis, factoring in information on comparable houses and other relevant specifications within the home itself. It doesn't matter if the economy is doing well or declining.
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Myth: The house's exterior is determinate of the actual worth of the house; it is unnecessary to do an interior appraisal.
Fact: To conclude an accurate worth beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply viewing the home from the outside.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance your home, you own the provided appraisal report.
Fact: The document is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given it by their lending agency.
Myth: There's no need for home buyers to even concern themselves with what the appraisal contains so long as their lending agency is satisfied.
Fact: Only if home buyers read a copy of their report 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. Also, the appraisal report makes an excellent record for future reference, comprised of useful and often-revealing data - including 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 vicinity.
Myth: Appraisals are ordered only to estimate real estate property values in house sales involving mortgage-lending deals.
Fact: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you order a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The purpose of the appraiser is to find an opinion of value in the appraisal process and through creating the report. A home inspector determines the condition of the home and its main components and reports their findings.