Myth: The value that is ascertained by the appraiser is required to be equivalent to the market value.
Reality: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always.
Examples include when interior reconstruction has happened and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an extended period.
Myth: Depending on if the appraisal is ordered for the buyer or the seller, the opinion of value of the property will vary.
Reality: There is no real interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, regardless of for whom the appraisal is ordered.
Myth: Market value will be the same as replacement cost.
Reality: The way market value is found is based on what a buyer would be willing to pay a willing seller for a home without being under duress from any external party to buy or sell.
Replacement value is the dollar amount required to reconstruct a house in-kind.
Myth: Specific methods, such as the price per square foot of the property, are what appraisers use to determine the value of a house.
Reality: Appraisers make a full analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: In a powerful economy - when the values of homes in a given county are reported to be appreciating by a particular percentage - the values of individual houses in the area can be expected to appreciate by that same percentage.
Reality: All appreciation of value is on an individual basis, determined by information on relevant elements and the data of comparable homes.
It doesn't matter if the economy is doing well or declining.
Myth: Just examining what the home looks like on the outside gives a good idea of its value.
Reality: To determine an accurate value beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and market trends.
There's no possible way to get all of this information from simply looking at the home from the outside.
Myth: Since the consumer is the party who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal.
Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be given it by their lender.
Myth: It doesn't concern consumers what's in the report so long as it meets the needs of their lending agency.
Reality: Only when consumers examine a copy of their appraisal report can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can serve as a record for the future, as it contains an exorbitant amount of 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 area.
Myth: Appraisals are ordered only to assess building values in house sales involving mortgage-lending transactions.
Reality: Based upon their qualifications and designations, appraisers can and often do provide a multitude of different 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 get a home inspection.
Reality: An appraisal does not fulfill the same purpose as an inspection.
The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal.
A home inspector determines the condition of the home and its main components and reports these findings.
