Myth: Market value will always be similar to the assessed value of the property.
Reality: This is not often the case; most states do support the idea 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 properties in the vicinity have not been reassessed for an prolonged period.
Myth: The opinion of value of a house will vary depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the outcome of the report, therefore he will conduct his work with impartiality and independence, no matter of for whom the appraisal is conducted.
Myth: Any time market value is established, it should be the same as the replacement cost of the property.
Reality: Without any suggestion from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific house.
The replacement cost is the dollar amount necessary to rebuild a property in-kind.
Myth: Specific formulae, like the price per square foot, are what appraisers use to determine the value of a house.
Reality: There are many numerous methods that an appraiser will use to make a detailed investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the sales prices of recently sold comparable houses.
Myth: When the economy is strong and the sales prices of homes are reported to be increasing by a certain percentage, the other properties in the proximity can be expected to rise based on that same percentage.
Reality: Any value an appraiser reports in regards to a specific property is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the house itself.
It doesn't matter if the economy is doing well or declining.
Myth: Just examining what the house looks like on the outside gives an idea of its value.
Reality: There are a multitude of different factors that show property value; these factors include area, condition, improvements, amenities, and market trends.
There's no real way to get all of this information from just looking at the house from the outside.
Myth: Since 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 belongs to them.
Reality: Unless a lender releases its vestment in the document, it is legally owned by the lending company that purchased the appraisal.
However, consumers have to be given a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the needs of their lender.
Reality: Only when consumers examine a copy of their appraisal can they double-check its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of data contained in a 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: The only reason someone would order an appraisal is if a home needs its value estimated in a lender-based sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a variety of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: A home inspection serves a completely different purpose than an appraisal report.
The reason behind an appraisal report is to find an opinion of market value during the appraisal process and the production of the appraisal report.
A home inspector analyzes the condition of the house and its main components and reports these findings.
