Appraisal myths & facts

By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported purchases. The law entitles you to receive a copy of your completed appraisal report from your lending agency after it has been provided. 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 equivalent to the market value.

Fact: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Generally when interior remodeling has been done and the assessor is not aware of the improvement or properties in the neighborhood have not been reassessed for years or more, it may vary wildly.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the value of the house will vary.

Fact: There is no personal interest on the part of the appraiser in the outcome of the report, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is created.

Myth: The replacement cost of the home will be is on par with the market value.

Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a property without being under pressure from any external party to buy or sell. The dollar amount demanded to rebuild a property is what shows the replacement cost.

Myth: Appraisers use a calculation, such as a specific price per square foot, to conclude the worth of a house.

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the price of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: As houses increase their worth by a specific percentage - in a strong economic state - the houses around the appreciating properties are expected to appreciate by the same amount.

Fact: Any worth at which an appraiser concludes in regards to a certain house is always personalized, based on certain factors found from the data of comparable houses and other considerations within the house itself. It makes no difference if the economy is strong or bad.

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Myth: The house's exterior is determinate of the actual price of the home; there is no need to do an interior appraisal.

Fact: Property worth is determined by a number of factors, including area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found simply by looking at the home from the outside.

Myth: Since you're the one providing the money for the appraisal report when applying for the loan to buy or refinance real estate, you own the provided appraisal.

Fact: The report is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the report. However, consumers have to be provided with a copy of the document upon written request, through the Equal Credit Opportunity Act.

Myth: There's no need for home buyers to even care about what the appraisal contains so long as their lender is satisfied.

Fact: It is very important for home buyers to go through a copy of their appraisal so that they can double-check the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, as it contains a great deal of data - 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 vicinity.

Myth: The only reason someone would hire an appraiser is if a property needs its value assessed in a lender sales transaction.

Fact: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: You shouldn't need to get an appraisal if you have had a home inspection.

Fact: Appraisal reports are nothing like a home inspection. The reason behind an appraisal report is to find an opinion of fair market value during the appraisal process and the completion of the appraisal. The purpose of a home inspector is to approximate the condition of the house and its major components, then write a report on these conclusions.