Myth: Assessed value will always be similar to market value.
Reality: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always.
At times when interior remodeling has been done 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: The buyer or the seller often will have some pull in the value of the home depending upon for whom the appraiser is working.
Reality: The appraiser has no personal interest in the result of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will mirror replacement cost.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under duress to buy or sell.
If the home were reconstructed, the dollar amount needed to do so would make up the replacement cost.
Myth: Certain formulae, like the price per square foot, are the methods appraisers use to arrive at the value of a house.
Reality: Appraisers make an exhaustive 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: When the economy is robust and the sales prices of houses are found to be rising by a certain percentage, the other homes in the area can be expected to increase based on that same percentage.
Reality: All appreciation of value is on an individual basis, determined by data on relevant elements and the data of comparable homes.
It doesn't matter if the economy is on the rise or declining.
Myth: You can often tell what a home is worth simply by looking at the outside.
Reality: Home value is concluded by a multitude of variables, including area, condition, improvements, amenities, and market trends.
Obviously, none of these factors can be found simply by examining the property from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their home, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document.
However, consumers have to be given a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it meets the necessities of their lending company.
Reality: It is almost imperative for consumers to peruse a copy of their report so that they can double-check the accuracy of the report, in case it's required to question its veracity. 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 a great deal of information - including, but certainly 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: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending institution.
Reality: Based upon their qualifications and designations, appraisers can and will provide a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection.
Reality: An appraisal report does not fulfill the same purpose as an inspection report.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal.
The job of a home inspector is to assess the condition of the home and its main components, then produce a report on these inspection.
