Myth: Assessed value will 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.
Usually when interior remodeling has occurred and the assessor is not aware of the improvement or other homes in the neighborhood have not been reassessed for a good length of time, it may vary widely.
Myth: The value of a house will vary depending upon whether the appraisal is provided for the buyer or the seller.
Reality: The appraiser has no vested interest in the result of the appraisal report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should match the replacement cost of the home.
Reality: The way market value is derived is based on what a home buyer would likely pay a willing seller for a house without being under influence from any external party to buy or sell.
Replacement value is the dollar amount needed to reconstruct a property in-kind.
Myth: Specific methods, such as the price per square foot of the property, are the methods appraisers use to ascertain the value of a home.
Reality: There are many different ways that an appraiser will use to make an in-depth investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to certain facilities and the values of recently sold comparable properties.
Myth: When the economy is robust and the sales prices of houses are found to be rising by a certain percentage, the other properties in the neighborhood can be expected to appreciate based on that same percentage.
Reality: The appreciation of a specific property has to be determined on an individualized basis, factoring in data on comparable homes and other relevant specifications within the property itself.
It makes no difference if the economy is strong or bad.
Myth: Just seeing what the home looks like on the outside gives a good idea of its value.
Reality: To conclude a genuine value beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and market trends.
An external inspection obviously can't provide all of the data required.
Myth: Considering that the consumer is the one who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Reality: Unless a lender releases its interest in the document, it is legally owned by the lending company that purchased the appraisal.
However, consumers have to be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the report contains so long as their lending agency is fine with the contents therein.
Reality: A consumer should definitely look through their appraisal; there may be some questions or some concerns with the accuracy of the appraisal that need to be addressed. 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, containing helpful and often-revealing data - 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its value estimated in a lender sales transaction.
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: There's no need to get an appraisal if you get a home inspection.
Reality: Appraisal reports are completely different than a home inspection report.
The appraiser forms an opinion of value in the appraisal process and resulting appraisal.
House inspectors will compose a report that will show the condition of the home and its major components and possible damage.