Appraisal myths debunked
By law, an appraiser must be state-licensed to perform appraisals for federally-backed purchases. You are also entitled by law to acquire a copy of the completed appraisal from your lending agency. Contact Herrin Appraisal Company if you have any concerns about the appraisal process.
Myth: Assessed value generally will equate to market value.
Fact: 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 happened and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the property will vary.
Fact: There is no real interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.
Myth: The replacement cost of the property will be is on par with the market value.
Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a house without being under duress from any external group to buy or sell. Replacement cost is the dollar amount necessary to rebuild a house in-kind.
Myth: Certain methods, such as the price per square foot, are the methods appraisers use to come to the price of a house.
Fact: There are many varied methods that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.
Myth: When the economy is doing well and the cost of houses are reported to be increasing by a certain percentage, the other homes in the area can be expected to appreciate based on that same percentage.
Fact: Cost increase of a certain house has to be determined on an individualized basis, factoring in data on comparable houses and other relevant specifications within the house itself. This is true in fair economic times as well as poor.
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Myth: The property's exterior is determinate of the actual worth of the house; it is unnecessary to do an interior appraisal.
Fact: There are a multitude of different factors that conclude property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these things can be derived simply by looking at the property from the exterior.
Myth: Since the consumer is the party who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. However, consumers must be supplied with a copy of the document upon written request, through the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their document so long as it satisfies the requirements of their lending agency.
Fact: It is almost imperative for home buyers to go through a copy of their appraisal report so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a near perfect record for future reference, comprised of useful and often-revealing data - including 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the price of a house during a sales transaction involving a lending company.
Fact: Hiring an appraiser can fulfill a variety of requirements 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: An appraisal report is no different than a home inspection report.
Fact: Appraisal reports are nothing like a home inspection report. The purpose of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal report. A home inspector assesses the condition of the property and its main components and reports their findings.
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