Common myths about appraising
By law, an appraiser must be state-licensed to produce appraisals for federally-related purchases. Also by law, you are allowed to request a copy of the completed appraisal report from your lending agency. Contact W. Eric Howard & Associates if you have any concerns about the appraisal process.
Myth: Assessed value should be similar to to market value.
Fact: It is possible that Maryland, like most states, validates the idea that the assessed value is the same as the market value; however, this is sometimes the exception rather than the rule. Usually when interior remodeling has occurred and the assessor is not aware of the improvement or other homes in the neighborhood have not been reassessed for years or more, it may vary wildly.
Myth: The value of a property will vary depending upon if the appraisal is produced for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will approximate replacement cost.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under duress to buy or sell. The dollar amount required to reconstruct a house is what constitutes the replacement cost.
Myth: There are certain methods that real estate appraisers use to find the opinion of value of a property, such as the price per square foot.
Fact: There are many varied ways that an appraiser will use to make a comprehensive investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.
Myth: In a strong economy - when the prices of houses in a given region are found to be rising by a certain percentage - the values of individual properties in the vicinity can be expected to increase by that same percentage.
Fact: All appreciation of value is on an individual basis, concluded by data on relevant conditions and the data of comparable homes. It makes no difference if the economy is powerful or bad.
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Myth: Just seeing what the property looks like on the outside gives an excellent idea of its value.
Fact: To find an accurate worth beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these things can be found just by inspecting the home from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their house, they own their appraisal.
Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that ordered the appraisal. However, consumers must be given a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it satisfies the needs of their lender.
Fact: A home buyer should definitely read through their document; there could be some questions or some concerns about the accuracy of the appraisal that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information contained in an report that could 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 vicinity.
Myth: The only reason someone would order an appraisal is if a home needs its price assessed in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a multitude of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is no different than a home inspection.
Fact: An appraisal does not serve the same purpose as an inspection report. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. A home inspector determines the condition of the house and its major components and reports their findings.