Appraisal myths & facts
It is mandated by law that a real estate appraiser must be state-licensed to create appraisal reports for federally-supported home transactions in Arizona. Also by law, you have the ability to demand a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal procedure.
Myth: Market value will be the same as the assessed value of the property.
Fact: 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. At times when interior remodeling has been done and the assessor is not aware of the improvement or other houses in the neighborhood have not been reassessed for quite a while, it may vary wildly.
Myth: The buyer or the seller can have an influence in the cost of the property depending upon for whom the appraiser is working.
Fact: The opinion of value of the home does not affect the pay of the appraiser; because of this, the appraiser has no pressured interest in the opinion of value of the house. What this means is he will provide job with impartiality and independence regardless for whom the appraisal is produced.
Myth: Market value will be the same as replacement cost.
Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house. The replacement cost is the dollar amount required to rebuild a home in-kind.
Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a property.
Fact: There are many varied processes that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable houses.
Myth: In a robust economy - when the values of homes in a given region are found to be rising by a particular percentage - the prices of individual homes in the area can be expected to appreciate by that same percentage.
Fact: Price increase of a specific home is always concluded on an individualized basis, factoring in data on comparable houses and other relevant specifications within the property itself. This is true in fair economic times as well as bad.
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Myth: Just seeing what the house looks like on its exterior gives an idea of its worth.
Fact: Property worth is concluded by a multitude of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by looking at the home from the outside.
Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their property, they legally own their appraisal report.
Fact: Legally, the appraisal report is owned by the lending company unless the lender releases their interest in the document. By the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be given one by their lending company.
Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the requirements of their lending company.
Fact: It is almost imperative for home buyers to look at a copy of their appraisal report so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data stored in an report that can 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the price of a property during a sales transaction involving a lender.
Fact: Based upon their qualifications and designations, appraisers can and will perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you have had a home inspection.
Fact: A home inspection serves a completely different purpose than an appraisal. The point of an appraisal report is to find an opinion of fair market value during the appraisal process and the production of the report. House inspectors will compose a report that will determine the condition of the house and its major components and possible damage.