Common myths about appraising
It is mandated by legal agencies that a real estate appraiser needs to be state-licensed to create appraisals for federally-related property purchases in California. Also by law, you have the right to request a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: Assessed value should be similar to to market value.
Fact: It is possible that California, like most states, validates the common myth that the assessed value is the same as the market value; however, this is not always true. Generally when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for quite some time, it may vary wildly.
Myth: The value of a property will differ depending upon whether 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 complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should be similar to the replacement cost of the house.
Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. If the house were rebuilt, the dollar amount necessary to do so would make up the replacement cost.
Myth: There are specific ways that appraisers use to find the opinion of value of a house, such as the price per square foot.
Fact: An appraisal report is an assertion of information based on the property's size, location, proximity to specific facilities, the condition of the property and the price of recent comparable sales. You can count on Premier Appraisal of SoCal's appraisers to be ethical in assessing this information.
Myth: In a robust economy - when the prices of houses in a given county are found to be rising by a certain percentage - the costs of individual properties in the vicinity can be expected to appreciate by that same percentage.
Fact: Any cost at which an appraiser arrives concerning a specific property is always individualized, based on certain factors derived from the information of comparable properties and other specifications within the home itself. It makes no difference whether the economy is good or poor.
Have other questions about appraisers, appraising or real estate in Orange County or Mission Viejo, CA?Contact us
Myth: Just examining what the house looks like on its exterior gives an excellent idea of its worth.
Fact: To determine an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found just by inspecting the property from the outside.
Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending agency that purchased the appraisal. However, consumers have to be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal report contains so long as their lending agency is fine with the contents therein.
Fact: It is very important for home buyers to peruse a copy of their appraisal report so that they can verify the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a near perfect record for future reference, filled with useful and often-revealing 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 home needs its cost estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and may perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection report.
Fact: A home inspection serves a completely different purpose than an appraisal report. The point of an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal report. The task of a home inspector is to find the condition of the home and its major components, then write a report on these conclusions.