Common myths about appraising
By law, an appraiser must be state-licensed to perform appraisals for federally-related transactions. Also by law, you have the right to demand a copy of the completed appraisal report from your lender. Contact us if you have any questions about the appraisal process.
Myth: The value that is ascertained by the appraiser must be equivalent to the market value.
Fact: While most states support the concept that assessed value equates estimated market value, this usually is not the case. Generally when interior remodeling has occurred and the assessor is not aware of the improvement or properties in the area have not been reassessed for quite some time, it may vary wildly.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the appraised value of the property will vary.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is conducted.
Myth: Market value will approximate replacement cost.
Fact: Market value is acquired by what a willing buyer would likely pay a willing seller for a particular house, with neither being under undue influence to buy or sell. Replacement value is the dollar amount required to reconstruct a home in-kind.
Myth: Appraisers use a formula, like a certain price per square foot, to figure out the worth of a house.
Fact: An appraisal report is an amalgamation of information based on the property's size, location, proximity to certain facilities, the condition of the house and the value of recent comparable sales. You can count on OK Appraisals's staff to be honest in assessing this data.
Myth: When the economy is doing well and the cost of houses are found to be increasing by a certain percentage, the other homes in the proximity can be expected to appreciate based on that same percentage.
Fact: Value appreciation of a certain property has to be determined on an individualized basis, factoring in data on comparable homes and other relevant specifications within the house itself. It doesn't matter if the economy is on the rise or declining.
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Myth: Just examining what the home looks like on the outside gives a good idea of its worth.
Fact: There are a number of different factors that conclude property value; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the information required.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that ordered the appraisal. Consumers have to be supplied with a version of the appraisal report upon written request as per the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even concern themselves with what the appraisal contains so long as their lending agency is satisfied.
Fact: Only if home buyers check out a copy of their appraisal can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an report that could be useful to the consumer in the future, such as 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 order an appraisal unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending company.
Fact: Depending upon their qualifications and designations, appraisers can and will perform a series of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection report.
Fact: Appraisal reports are definitely not the same as a home inspection report. The purpose of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. House inspectors will write a report that will express the condition of the property and its major components and possible damage.