Appraisal myths & facts

By law, an appraiser is required to be state-licensed to perform appraisals for federally-backed transactions. You are also entitled by law to demand a copy of the finished report from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Market value has to be the same as the assessed value of the property.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. There are times when interior remodeling has been done and the assessor is unaware of the improvement or other homes in the Naperville have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller will have an influence in the value of the home depending upon for whom the appraiser is working.

Fact: The value of the house does not affect the pay of the appraiser; due to this, the appraiser has no preconceived interest in the value of the house. Obviously, he will conduct services with impartiality and objectivity regardless for whom the appraisal is created.

Myth: The replacement cost of the house will be is on par with the market value.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific house, with neither being under pressure to buy or sell. Replacement cost is the dollar amount needed to rebuild a home in-kind.

Myth: Appraisers use a formula, like a certain price per square foot, to figure out the worth of a home.

Fact: There are many different formulae that an appraiser will use to make a full analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.

Myth: When the economy is on the rise and the sales prices of homes are reported to be rising by a certain percentage, the other properties in the vicinity can be expected to appreciate based on that same percentage.

Fact: Any cost at which an appraiser concludes in regards to a particular house is always personalized, based on certain factors pulled from the information of comparable properties and other specifications within the house itself. This is true in fair economic times as well as bad.

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Myth: You can commonly tell what a house is worth simply by looking at the outside.

Fact: To conclude an accurate price beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these factors can be derived just by viewing the home from the exterior.

Myth: Considering that the consumer is the person who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Legally, the report is owned by the lender unless the lender releases their interest in the appraisal. However, home buyers must be given a copy of the appraisal upon written request, under the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even concern themselves with what the report contains so long as their lending institution is fine with the contents therein.

Fact: A consumer should definitely read through their appraisal report; there could be some questions or some concerns about the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an invaluable record for future reference, filled with 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: Appraisals are ordered only to estimate home values in property sales involving mortgage-lending deals.

Fact: Depending upon their qualifications and designations, appraisers can and will perform a series of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: There's no reason to get an appraisal if you order a home inspection.

Fact: A home inspection serves a completely different purpose than an appraisal. The task of the appraiser is to arrive at an opinion of value in the appraisal process and through writing the report. A home inspector assesses the condition of the property and its main components and reports these findings.