Appraisal myths debunked
By law, an appraiser needs to be state-licensed to produce appraisals for federally-supported transactions. Also by law, you have the right to request a copy of the finished appraisal from your lending agency. Contact W. Eric Howard & Associates if you have any concerns about the appraisal procedure.
Myth: Market value will be similar to the assessed value of the property.
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 remodeling that the assessor is unaware of and a lack of reassessment on nearby homes are excellent examples of why this occurs.
Myth: Depending on if the appraisal is written for the buyer or the seller, the value of the house will vary.
Fact: The opinion of value of the house does not affect the payment of the appraiser; because of this, the appraiser has no preconceived interest in the opinion of value of the property. Obviously, he will provide services with impartiality and independence regardless for whom the appraisal is conducted.
Myth: Any time market value is found, it should be the same as the replacement cost of the house.
Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under pressure from any outside party to purchase or sell. If the house were rebuilt, the dollar amount required to do so would be the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to come to the worth of a property.
Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the worth of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: In a robust economy - when the prices of houses in a given region are reported to be appreciating by a certain percentage - the values of individual houses in the proximity can be expected to appreciate by that same percentage.
Fact: Price increase of a specific property has to be concluded on an individualized basis, factoring in data on comparable properties and other relevant specifications within the house itself. This is true in fair economic times as well as bad.
Have other questions about appraisers, appraising or real estate in Anne Arundel County or Severn, MD?Contact W. Eric Howard & Associates
Myth: You can generally see what a home is worth simply by looking at the exterior.
Fact: House value is concluded by a number of factors, including location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data required.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance their house, they legally own their appraisal report.
Fact: The report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. Home buyers have to be provided with a copy of the document upon written request because of the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their document so long as it meets the necessities of their lending institution.
Fact: Only if home buyers look through 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. An appraisal report can double as a record for the future, containing an incredible amount of information - 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 area.
Myth: Appraisers are hired only to estimate building values in home 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 provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is no different than a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal. The appraiser finds an opinion of value in the appraisal process and resulting document. House inspectors will compose a report that will determine the condition of the house and its major components and possible damage.