Appraisal myths & facts
Legally, an appraiser is required to be state certified to create substantiated real estate appraisals for federally-related sales. Also by law, you have the ability to demand a copy of the completed appraisal from your lending agency. Contact us if you have any questions about the appraisal process.
Myth: Assessed value should be equal to market value.
Fact: It could be that Arizona, like most states, supports the suggestion that the assessed value is no different from the market value; however, this is sometimes the exception rather than the rule. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended period of time.
Myth: The buyer or the seller can have some pull in the cost of the home depending upon for whom the appraiser is working.
Fact: There is no real interest on the part of the appraiser in the result of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is written.
Myth: The replacement value of the property should be is on par with the market value.
Fact: The way market value is found is based on what a home buyer would likely pay a willing seller for a property without being under influence from any external group to purchase or sell. If the house were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the cost of a house, like the price per square foot.
Fact: There are many different ways that an appraiser will use to make an in-depth investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable properties.
Myth: As homes appreciate by a specific percentage - in a robust economic state - the properties in proximity are figured to increase by the same amount.
Fact: Any price at which an appraiser arrives in regards to a specific home is always personalized, based on certain factors pulled from the information of comparable properties and other considerations within the home itself. It makes no difference whether the economy is good or on the decline.
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Myth: Just seeing what the house looks like on the outside gives a good idea of its worth.
Fact: To find an accurate worth beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the data needed.
Myth: Considering that the consumer is the one who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Unless a lending agency releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal. However, home buyers must be provided with a copy of the document upon written request, under the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even worry about what the appraisal contains so long as their lending company is satisfied.
Fact: It is almost imperative for consumers to check over a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an report that could be useful to the home buyer 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 hire an appraiser unless you are trying to get an assessment of the value of a home during a sales transaction involving a lender.
Fact: Depending upon their qualifications and designations, appraisers can and often do provide a variety 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: A home inspection report serves a completely different purpose than an appraisal. The point of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. House inspectors will produce a report that will explain the condition of the home and its major components and possible damage.