Appraisal myths debunked

By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported sales. You are also entitled by law to acquire a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value needs to be equivocal to the assessed value of the property.

Fact: While most states uphold the concept that assessed value equates estimated market value, this generally is not the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are perfect examples of why this occurs.

Myth: Depending on whether the appraisal is done for the buyer or the seller, the value of the home will vary.

Fact: The appraiser has no personal interest in the result of the report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value will be the same as replacement cost.

Fact: The way market value is derived is based on what a home buyer would be willing to pay a willing seller for a house without being under influence from any external group to buy or sell. If the house were rebuilt, the dollar amount required to do so would be the replacement cost.

Myth: Specific methods, such as the price per square foot, are the methods appraisers use to arrive at the cost of a home.

Fact: There are many different processes that an appraiser will use to make an in-depth analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable houses.

Myth: As properties increase their worth by a certain percentage - in a robust economic state - the houses in proximity are expected to increase by the same amount.

Fact: Any value at which an appraiser concludes in regards to a particular house is always individualized, based on certain factors pulled from the data of comparable properties and other specifications within the property itself. It doesn't matter if the economy is on the rise or declining.

Have other questions about appraisers, appraising or real estate in Santa Rosa County or Gulf Breeze, Florida?

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Myth: You can often tell what a property is worth simply by looking at the exterior.

Fact: To conclude an accurate price beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found just by looking at the home from the outside.

Myth: Since you're the one providing the money for the appraisal report when applying for the loan to purchase or refinance real estate, you own the ordered appraisal.

Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the document. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the appraisal report must be provided with one by their lender.

Myth: Home buyers need not care about what is in their appraisal document so long as it meets the necessities of their lending agency.

Fact: Only if consumers read a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data stored in an appraisal that should be useful to the consumer in the future, such as 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 price of a home during a sales transaction involving a lending agency.

Fact: Based 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: A house inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are completely different than a home inspection. The function of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the report. A home inspector assesses the condition of the property and its main components and reports their findings.