Myth: Market value must be similar to the assessed value of the property.
Reality: While most states support the concept that assessed value approximates estimated market value, this generally is not the case. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended period.
Myth: The appraised value of a home will be different depending upon if the appraisal is conducted for the buyer or the seller.
Reality: The appraised value of the home does not affect the pay of the appraiser; as a result, the appraiser has no vested interest in the opinion of value of the home. This means that he will complete his business with impartiality and independence regardless of for whom the appraisal is provided.
Myth: Any time market value is determined, it should match the replacement cost of the house.
Reality: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under pressure from any outside party to buy or sell. The dollar amount needed to rebuild a home is what constitutes the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the value of a home.
Reality: There are many different processes that an appraiser will use to make an in-depth investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable properties.
Myth: In a strong economy - when the sales prices of homes in a given area are found to be rising by a particular percentage - the values of individual houses in the vicinity can be expected to appreciate by that same percentage.
Reality: Any value an appraiser derives concerning a certain home is always individualized, based on certain factors pulled from the information of comparable houses and other considerations within the home itself. It doesn't matter if the economy is on the rise or declining.
Myth: The property's exterior is determinate of the expected price of the property; it is unnecessary to do an interior appraisal.
Reality: Property value is determined by a number of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply viewing the property from the outside.
Myth: Because the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Reality: Unless a lender releases its vestment in the report, it is legally owned by the lending company that ordered the appraisal. Consumers must be supplied with a copy of the report upon written request because of the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their appraisal so long as it meets the necessities of their lending agency.
Reality: Only when consumers look through a copy of their report can they double-check its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that can be useful to the consumer 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: Appraisers are hired only to estimate home values in house sales involving mortgage-lending transactions.
Reality: Ordering an appraisal can fulfill a variety of needs 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: There's no need to get an appraisal if you have had a home inspection.
Reality: A home inspection has a completely different purpose than an appraisal. The task of the appraiser is to form an opinion of value in the appraisal process and through producing the report. A home inspector determines the condition of the house and its main components and reports these findings.