Myth: The value that is assessed by the appraiser must be equivalent to the market value.
Reality: While most states support the concept that assessed value approximates estimated market value, this generally is not the case.
At times when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the area have not been reassessed for quite some time, it may vary widely.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the value of the property will vary.
Reality: There is no personal interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, regardless of for whom the appraisal is written.
Myth: The replacement cost of the house will be on par with the market value.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under undue influence to buy or sell.
The dollar amount required to rebuild a house is what constitutes the replacement cost.
Myth: Appraisers use a calculation, such as a certain price per square foot, to arrive at the value of a house.
Reality: Appraisers make a detailed analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: In a powerful economy - when the values of homes in a given neighborhood are reported to be increasing by a certain percentage - the prices of individual homes in the vicinity can be expected to rise by that same percentage.
Reality: An increase in value of a specific house has to be determined on an individualized basis, factoring in information on comparable properties and other relevant specifications within the home itself.
It doesn't matter if the economy is on the rise or declining.
Myth: You can often see what a home is worth simply by looking at the exterior.
Reality: Property value is concluded by a number of variables, including location, condition, improvements, amenities, and market trends.
An outside-only inspection definitely can't provide all of the information necessary.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their house, they legally own their appraisal.
Reality: Legally, the appraisal report is owned by the lending agency unless the lender releases their interest in the appraisal.
However, consumers have to be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't matter to consumers what's in the report so long as it satisfies the necessities of their lending company.
Reality: Only when home buyers read a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a wealth of data stored in an appraisal report that can be useful to the home buyer in the future, such as 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 order an appraisal is if a house needs its value assessed in a lender sales transaction.
Reality: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal does not serve the same purpose as an inspection.
The task of the appraiser is to arrive at an opinion of value in the appraisal process and through creating the report.
A home inspector determines the condition of the property and its main components and reports these findings.
