Myth: The value that is assessed by the appraiser must be equivalent to the market value.
Reality: While most states uphold the concept that assessed value equates estimated market value, this commonly is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby houses are prime examples of why there might be a differential in price.
Myth: The value of a home will be different depending upon if the appraisal is ordered for the buyer or the seller.
Reality: 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, regardless of for whom the appraisal is written.
Myth: Market value will mirror replacement cost.
Reality: Without any suggestion from any external parties to buy 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 home in-kind.
Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the value of a home.
Reality: Appraisers make a comprehensive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: In a robust economy - when the prices of properties in a given region are reported to be rising by a certain percentage - the values of individual homes in the proximity can be expected to increase by that same percentage.
Reality: An increase in value of a specific house is always concluded on a case-by-case basis, factoring in data on comparable homes and other relevant considerations. It doesn't matter if the economy is doing well or declining.
Myth: You can often tell what a home is worth simply by looking at the exterior.
Reality: There are a multitude of different factors that determine the value of a house; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by viewing the house from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their home, they legally own their appraisal report.
Reality: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Due the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given it by their lending company.
Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the needs of their lending company.
Reality: Only when home buyers look through a copy of their appraisal report 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. An appraisal can double as a record for the future, containing an exorbitant amount of data - 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 proximity.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending institution.
Reality: Ordering an appraisal can fulfill a variety of wants depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection serves a completely different purpose than an appraisal. The appraiser concludes on an opinion of value in the appraisal process and resulting appraisal report. House inspectors will create a report that will express the condition of the property and its major components and possible damage.