Appraisal myths debunked

Legally, an appraiser needs to be state certified to write substantiated appraisal reports for federally-related transactions. Also by law, you have the right to receive a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value must be the same as the assessed value of the property.

Fact: While most states back the suggestion that assessed value is equal to estimated market value, this generally is not the case. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or other homes in the area have not been reassessed for quite some time, it may vary wildly.

Myth: The buyer or the seller often will have an influence in the cost of the home depending upon for whom the appraiser is working.

Fact: The appraiser has no vested interest in the outcome of the report and should complete his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: The replacement cost of the property is always is on par with the market value.

Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a property without being under influence from any external party to purchase or sell. The replacement cost is the dollar amount necessary to rebuild a house in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the value of a home.

Fact: There are many differing methods that an appraiser will use to make a detailed investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable properties.

Myth: In a strong economy - when the worth of houses in a given region are reported to be rising by a particular percentage - the costs of individual properties in the area can be expected to appreciate by that same percentage.

Fact: All increase of worth is on a case-by-case basis, found by information on relevant conditions and the data of comparable houses. This is true in excellent economic times as well as poor.

Have other questions about appraisers, appraising or real estate in Sacramento County or Elk Grove, CA?

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Myth: Just examining what the house looks like on the outside gives an excellent idea of its worth.

Fact: Home worth is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the information required.

Myth: Considering that the consumer is the one who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending agency that ordered the appraisal. However, home buyers have to be supplied with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.

Myth: Home buyers need not care about what is in their appraisal document so long as it meets the necessities of their lending company.

Fact: It is almost imperative for home buyers to go through a copy of their appraisal 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. An appraisal can serve as a record for the future, since it contains an exorbitant amount 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 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 perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is the same as a home inspection report.

Fact: Appraisal reports have almost nothing in common with a home inspection. The purpose of the appraiser is to form an opinion of value in the appraisal process and through writing the report. A home inspector determines the condition of the home and its major components and reports their findings.