Appraisal myths & facts
It is mandated by law that a real estate appraiser needs to be state-licensed to write appraisal reports for federally-related property sales in California. Also by law, you have the right to demand a copy of the completed report from your lending agency. Contact Premier Appraisal of SoCal if you have any questions about the appraisal procedure.
Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.
Fact: While most states uphold the idea that assessed value equates estimated market value, this often is not the case. Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the vicinity have not been reassessed for an extended period.
Myth: The buyer or the seller will have some pull in the cost of the home depending upon for whom the appraiser is working.
Fact: The cost of the home does not affect the salary of the appraiser; because of this, the appraiser has no personal interest in the opinion of value of the home. What this means is he will complete his business with impartiality and objectivity regardless for whom the appraisal is produced.
Myth: Market value will equate to replacement cost.
Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a property without being under duress from any external party to buy or sell. If the house were rebuilt, the dollar amount necessary to do so would be the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to come to the worth of a home.
Fact: An appraisal report is a collection of information based on the house's size, location, proximity to certain facilities, the condition of the house and the value of recent comparable sales. You can count on Premier Appraisal of SoCal's staff to be honest in assessing this information.
Myth: In a powerful economy - when the sales prices of homes in a given area are reported to be appreciating by a certain percentage - the worth of individual properties in the vicinity can be expected to increase by that same percentage.
Fact: All increase of price is on a case-by-case basis, found by data on relevant conditions and the data of comparable homes. This is true in strong economic times as well as poor.
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Myth: Just seeing what the property looks like on the outside gives an idea of its worth.
Fact: House value is concluded by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just examining the home from the outside.
Myth: Since you're the one providing the money for the appraisal report when applying for your loan to buy or refinance your house, you own the ordered appraisal report.
Fact: Legally, the appraisal report is owned by the lending company unless the lender relinquishes their interest in the document. Consumers have to be provided with a version of the appraisal report through request because of the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even concern themselves with what the appraisal contains so long as their lender is fine with the contents therein.
Fact: It is almost imperative for home buyers to look at a copy of their appraisal report so that they can double-check the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains a great deal 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 proximity.
Myth: The only reason someone would hire an appraiser is if a home needs its worth assessed in a lender sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot 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 the same as a home inspection report.
Fact: Appraisal reports have almost nothing in common with a home inspection report. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the report. House inspectors will create a report that will explain the condition of the home and its major components and possible damage.