Myth: The value that is assessed by the appraiser will be equivalent to the market value.
Reality: This usually isn't true; most states do support the suggestion that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: Depending on if the appraisal is done for the buyer or the seller, the cost of the property will vary.
Reality: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is ordered.
Myth: Market value should mirror replacement cost.
Reality: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under pressure from any external group to purchase or sell. The replacement cost is the dollar amount needed to rebuild a property in-kind.
Myth: Specific formulae, such as the price per square foot, are what appraisers use to come to the value of a house.
Reality: Appraisers complete an exhaustive analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: In a strong economy - when the values of homes in a given county are reported to be increasing by a certain percentage - the prices of individual homes in the area can be expected to increase by that same percentage.
Reality: Any value an appraiser derives in regards to a certain property is always individualized, based on certain factors derived from the data of comparable houses and other specifications within the home itself. This is true in excellent economic times as well as poor.
Myth: You can commonly find what a house is worth simply by looking at the exterior.
Reality: There are a multitude of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by inspecting the house from the exterior.
Myth: Because the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Reality: Legally, the report is owned by the lender unless the lender relinquishes their interest in the report. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given it by their lender.
Myth: There's no need for home buyers to even care about what the appraisal contains so long as their lending company is fine with the contents therein.
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. An appraisal report can double as a record for the future, since it contains 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: The only reason someone would hire an appraiser is if a property needs its value estimated in a lender-based sales transaction.
Reality: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you get a home inspection.
Reality: Appraisal reports have almost nothing in common with a home inspection. An appraiser forms an opinion of value in the appraisal process and resulting report. House inspectors will compose a report that will determine the condition of the property and its major components and possible damage.