Common myths about appraising
It is enforced by law that a real estate appraiser is required to be state-licensed to create appraisals for federally-supported home sales in California. The law gives you the right to get a copy of your finished appraisal report from your lender after it has been produced. Contact Premier Appraisal of SoCal if you have any concerns about the appraisal procedure.
Myth: Market value will always be the same as the assessed value of the property.
Fact: It might be that California, 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. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby properties are perfect examples of why the price can vary.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the value of the house will vary.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: Market value will equal replacement cost.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a certain home, with neither being under undue influence to buy or sell. Replacement cost is the dollar amount necessary to rebuild a house in-kind.
Myth: There are certain methods that appraisers use to find the cost of a house, like the price per square foot.
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 opinion of value of comparable properties.
Myth: As properties increase their worth by a certain percentage - in a strong economic state - the properties in proximity are expected to appreciate by the same amount.
Fact: All appreciation of value is on an individual basis, found by data on relevant considerations and the data of comparable homes. This is true in excellent economic times as well as poor.
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Myth: The property's exterior is determinate of the actual value of the home; it is unnecessary to do an interior appraisal.
Fact: Home value is determined by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from just inspecting the home from the exterior.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to buy or refinance your home, 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 appraisal report. Home buyers must be supplied with a version of the document upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it meets the needs of their lending company.
Fact: It is a very good idea for home buyers to go through a copy of their 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. Also, the appraisal report makes a near perfect record for future reference, containing useful and often-revealing 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 area.
Myth: Appraisers are hired only to estimate building values in home sales involving mortgage-lending deals.
Fact: Ordering an appraisal can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is no different than a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. The job of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. House inspectors will create a report that will show the condition of the house and its major components and possible damage.