Myth: Market value must be equivocal to the assessed value of the property.
Reality: While most states support the idea that assessed value equates estimated market value, this generally is not the case.
Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: The value of a property will vary depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement value of the house is always in line with the market value.
Reality: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a property without being under influence from any outside party to purchase or sell.
The dollar amount required to reconstruct a house is what constitutes the replacement cost.
Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the value of a home.
Reality: There are many varied processes that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable properties.
Myth: In a strong economy - when the values of houses in a given area are found to be appreciating by a particular percentage - the prices of individual homes in the area can be expected to increase by that same percentage.
Reality: The appreciation of a certain house has to be concluded on a case-by-case basis, factoring in data on comparable homes and other relevant considerations.
This is true in excellent economic times as well as bad.
Myth: You can commonly tell what a house is worth simply by looking at the exterior.
Reality: Property value is determined by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends.
There's no possible way to get all of this data from simply viewing the home from the outside.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to buy or refinance your home, you own the provided appraisal report.
Reality: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the appraisal.
However, home buyers must be given a copy of the report upon written request, because of the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the necessities of their lender.
Reality: Only when consumers read a copy of their appraisal 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.
Also, the appraisal report makes a near perfect record for future reference, comprised of helpful and often-revealing 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 vicinity.
Myth: Appraisals are ordered only to estimate real estate property values in house sales involving mortgage-lending deals.
Reality: Hiring an appraiser can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: There's no reason to get an appraisal if you get a home inspection.
Reality: An appraisal report does not serve the same purpose as an inspection report.
The function of an appraisal is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal.
The job of a home inspector is to approximate the condition of the house and its main components, then compose a report on their findings.