Appraisal myths debunked

It is required by legal agencies that an appraiser needs to be state-licensed to create appraisals for federally-related property transactions in Arizona. Also by law, you are allowed to request a copy of the finished report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value needs to be similar to 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. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.

Myth: The opinion of value of a property will vary depending upon if the appraisal is produced for the buyer or the seller.

Fact: The value of the property does not affect the salary of the appraiser; because of this, the appraiser has no vested interest in the cost of the property. What this means is he will render business with impartiality and objectivity regardless for whom the appraisal is provided.

Myth: Market value should approximate replacement cost.

Fact: The way market value is found is based on what a buyer would likely pay a willing seller for a property without being under duress from any external party to buy or sell. The replacement cost is the dollar amount needed to reconstruct a property in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to arrive at the cost of a property.

Fact: There are many numerous methods that an appraiser will use to make a detailed investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the sales price of recently sold comparable properties.

Myth: In a powerful economy - when the values of homes in a given neighborhood are reported to be increasing by a particular percentage - the costs of individual properties in the area can be expected to appreciate by that same percentage.

Fact: Any price at which an appraiser concludes concerning a specific property is always personalized, based on certain factors concluded from the data of comparable homes and other specifications within the home itself. This is true in excellent economic times as well as bad.

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Myth: The house's exterior is determinate of the actual value of the home; it is unnecessary to do an interior inspection.

Fact: To determine an accurate value beyond all doubt, an appraiser must inspect the home on a variety of factors based on location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by inspecting the property from the exterior.

Myth: Since you're the one funding for the appraisal when applying for your loan to buy or refinance your house, you own the provided appraisal.

Fact: Legally, the document is owned by the lender unless the lender releases their interest in the appraisal. However, home buyers have to be provided with a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the requirements of their lending agency.

Fact: It is very important for home buyers to go through a copy of their report so that they can verify 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. Also, the appraisal makes a near perfect record for future reference, comprised of useful and often-revealing data - including 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 estimate of the cost of a home during a sales transaction involving a lending agency.

Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: A home inspection report serves a completely different purpose than an appraisal report. The point of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector analyzes the condition of the house and its major components and reports these findings.