Appraisal myths & facts
Legally, a real estate appraiser needs to be state certified to produce substantiated real estate appraisals for federally-supported transactions. You are also entitled by law to demand a copy of the finished report from your lending agency. Contact Premier Appraisal of SoCal if you have any concerns about the appraisal process.
Myth: Assessed value will always equate to market value.
Fact: While most states uphold the suggestion that assessed value is equal to estimated market value, this generally 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 area have not been reassessed for an extended time.
Myth: The opinion of value of a property will differ depending upon if the appraisal is ordered for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is created.
Myth: Market value should equate to replacement cost.
Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. Replacement value is the dollar amount needed to reconstruct a house in-kind.
Myth: There are certain ways that real estate appraisers use to find the cost of a property, like the price per square foot.
Fact: There are many numerous methods that an appraiser will use to make a full analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable homes.
Myth: When the economy is strong and the sales prices of properties are found to be increasing by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.
Fact: All appreciation of value is on a case-by-case basis, found by information on relevant elements and the data of comparable properties. This is true in fair economic times as well as poor.
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Myth: The home's exterior is determinate of the actual worth of the property; it is unnecessary to do an interior appraisal.
Fact: To find an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from simply looking at the home from the outside.
Myth: Since you're the one funding for the appraisal report when applying for the loan to buy or refinance real estate, you own the produced appraisal report.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. However, consumers must be given a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their appraisal document so long as it exceeds the needs of their lending company.
Fact: A home buyer should definitely read through their appraisal; there could be some questions or some concerns about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing an incredible amount 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 proximity.
Myth: Appraisers are hired only to assess building values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many varied qualifications and designations which allow them to perform a variety of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You shouldn't need to get an appraisal if you get a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. The job of the appraiser is to come to an opinion of value in the appraisal process and through writing the report. The purpose of a home inspector is to determine the condition of the house and its major components, then provide a report on these inspection.