Myth: Assessed value should always be equal to market value.
Reality: This usually isn't true; most states do support the suggestion 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 properties in the neighborhood have not been reassessed for a good length of time, it may vary widely.
Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the home will vary.
Reality: There is no real interest on the part of the appraiser in the result of the appraisal, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is ordered.
Myth: Market value should mirror replacement cost.
Reality: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the house were reconstructed, the dollar amount necessary to do so would be the replacement cost.
Myth: Specific formulae, like the price per square foot, are what appraisers use to ascertain the value of a home.
Reality: Appraisers make a full analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: When the economy is robust and the sales prices of houses are found to be increasing by a certain percentage, the other properties in the area can be expected to increase based on that same percentage.
Reality: Any value an appraiser derives concerning a particular house is always individualized, based on certain factors pulled from the data of comparable homes and other specifications within the property itself. This is true in robust economic times as well as poor.
Myth: The home's exterior is determinate of the actual value of the house; there is no need to do an interior appraisal.
Reality: To determine a conclusive value beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found just by inspecting the home from the exterior.
Myth: Considering that the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.
Reality: The document is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Consumers have to be supplied with a version of the document through request because of the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending institution is satisfied.
Reality: It is very important for consumers to peruse a copy of their report so that they can double-check the accuracy of the report, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal report that should 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 region.
Myth: Appraisers are hired only to estimate building values in house sales involving mortgage-lending transactions.
Reality: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a variety 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 report. An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal. The job of a home inspector is to determine the condition of the house and its main components, then provide a report on these findings.