Common myths about appraising
It is required by law that a real estate appraiser needs to be state-licensed to produce appraisal reports for federally-supported property sales in Florida. Also by law, you have the right to receive a copy of the completed report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: Market value will always be similar to the assessed value of the property.
Fact: While most states support the concept that assessed value is the same as estimated market value, this often is not the case. At times when interior remodeling has occurred and the assessor is not aware of the improvement or other homes in the area have not been reassessed for quite a while, it may vary wildly.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the opinion of value of the home will vary.
Fact: The appraiser has no vested interest in the outcome of the report and should conduct 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: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a home without being under duress from any outside group to purchase or sell. If the house were reconstructed, the dollar amount needed to do so would be the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to come to the cost of a house.
Fact: There are many differing methods that an appraiser will use to make an in-depth analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.
Myth: When the economy is strong and the worth of houses are found to be appreciating by a certain percentage, the other properties in the area can be expected to rise based on that same percentage.
Fact: All increase of worth is on a one-on-one basis, found by data on relevant conditions and the data of comparable houses. This is true in good economic times as well as poor.
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Myth: Just examining what the property looks like on its exterior gives a good idea of its worth.
Fact: To conclude an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. An external inspection obviously can't provide all of the information necessary.
Myth: Since you're the one providing the money for the appraisal report when applying for the loan to buy or refinance your house, you own the produced appraisal.
Fact: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the document. However, consumers must be given a copy of the document 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 meets the needs of their lending company.
Fact: It is almost imperative for home buyers to read a copy of their appraisal report so that they can double-check the accuracy of the report, 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. An appraisal can double as a record for the future, containing a great deal of 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 proximity.
Myth: Appraisers are hired only to estimate home values in property sales involving mortgage-lending deals.
Fact: Depending upon their qualifications and designations, appraisers can and may provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal. The appraiser decides upon an opinion of value in the appraisal process and resulting report. House inspectors will compose a report that will express the condition of the property and its major components and possible damage.