Myth: Assessed value generally will be similar to market value.
Reality: While most states back the suggestion that assessed value is the same as estimated market value, this often is not the case.
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: Depending on if the appraisal is done for the buyer or the seller, the value of the property will vary.
Reality: The appraiser has no personal interest in the result of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value should be the same as replacement cost.
Reality: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular home.
The dollar amount needed to reconstruct a home is what constitutes the replacement cost.
Myth: There are specific ways that real estate appraisers use to show the cost of a house, such as the price per square foot.
Reality: There are many differing calculations that an appraiser will use to make an in-depth investigation of every factor pertaining to 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: As properties appreciate by a certain percentage - in a strong economic state - the properties in proximity are expected to appreciate by the same amount.
Reality: All increase of value is on a case-by-case basis, found by information on relevant considerations and the data of comparable homes.
This is true in excellent economic times as well as bad.
Myth: Just examining what the house looks like on its exterior gives an idea of its value.
Reality: Home value is determined by a number of variables, including area, condition, improvements, amenities, and market trends.
Obviously, none of these variables can be found simply by examining the home from the exterior.
Myth: Because consumers fund appraisals when applying for loans to buy or refinance their property, they legally own their appraisal report.
Reality: Unless a lender releases its interest in the document, it is legally owned by the lending company that ordered the appraisal.
However, consumers have to be supplied with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their report so long as it meets the requirements of their lending agency.
Reality: It is almost imperative for home buyers to go through a copy of their appraisal so that they can double-check the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, as it contains an incredible amount of information - including, but certainly 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 area.
Myth: Appraisers are hired only to estimate house values in home sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and will provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The purpose of an appraisal report is to arrive at an opinion of market value during the appraisal process and the production of the appraisal.
House inspectors will compose a report that will explain the condition of the home and its major components and possible damage.