Myth: Assessed value generally will be equal to market value.
Reality: This usually isn't true; 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 lack of reassessment on nearby properties are perfect examples of why the price can vary.
Myth: The opinion of value of a property will be different depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: There is no real interest on the part of the appraiser in the outcome of the appraisal, therefore he will conduct his work with impartiality and independence, regardless of for whom the appraisal is written.
Myth: Market value should equal 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 property.
If the house were reconstructed, the dollar amount necessary to do so would form the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are the methods appraisers use to determine the value of a property.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: When the economy is doing well and the sales prices of homes are found to be increasing by a certain percentage, the other homes in the vicinity can be expected to appreciate based on that same percentage.
Reality: The appreciation of a specific home has to be determined on an individualized basis, factoring in data on comparable homes and other relevant elements.
It makes no difference if the economy is powerful or terrible.
Myth: The home's exterior is determinate of the actual value of the home; there is no need to do an interior inspection.
Reality: To determine a conclusive value beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
There's no real way to get all of this data from just viewing the property from the exterior.
Myth: Because the consumer is the person who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Reality: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the report.
Due the Equal Credit Opportunity Act, any consumer asking for a copy of the document must be provided with one by their lending agency.
Myth: Home buyers need not be concerned with what is in their document so long as it satisfies the necessities of their lending institution.
Reality: It is almost imperative for consumers to peruse a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the report makes a valuable record for future reference, filled with helpful and often-revealing information - 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: The only reason someone would hire an appraiser is if a house needs its value assessed in a lender sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a multitude of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost 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.
The point of an appraisal report is to arrive at an opinion of market value during the appraisal process and the production of the appraisal report.
House inspectors will produce a report that will show the condition of the home and its major components and possible damage.
