Myth: Market value must be the same as the assessed value of the property.
Reality: While most states uphold the concept that assessed value equates estimated market value, this usually is not the case.
Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The appraised value of a property will be different depending upon if the appraisal is provided for the buyer or the seller.
Reality: The appraiser has no personal interest in the outcome of the report and should complete his job 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 property.
Reality: Market value is found by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell.
The dollar amount needed to rebuild a property is what shows the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: When the economy is on the rise and the sales prices of properties are found to be rising by a certain percentage, the other houses in the neighborhood can be expected to rise based on that same percentage.
Reality: All appreciation of value is on a one-on-one basis, determined by information on relevant conditions and the data of comparable homes.
It doesn't matter if the economy is doing well or declining.
Myth: You can usually find what a home is worth simply by looking at the outside.
Reality: To find a solid value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends.
There's no possible way to get all of this information from simply examining the property from the exterior.
Myth: Since the consumer is the one who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.
Reality: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document.
However, consumers must be provided with a copy of the appraisal report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the needs of their lender.
Reality: A home buyer should definitely look through their appraisal report; there might be some questions or some concerns about the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal can serve as a record for the future, containing an exorbitant amount of 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 vicinity.
Myth: The only reason someone would hire an appraiser is if a house needs its value assessed 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 perform a great deal 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: A home inspection report has a completely different purpose than an appraisal.
The appraiser finds an opinion of value in the appraisal process and resulting appraisal.
A home inspector assesses the condition of the property and its major components and reports these findings.