Myth: Assessed value should be the same as 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. Usually when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for quite a while, it may vary widely.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the opinion of value of the property will vary.
Reality: The appraiser has no personal interest in the outcome of the appraisal and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value will mirror replacement cost.
Reality: The way market value is derived is based on what a home buyer would likely pay a willing seller for a home without being under duress from any external group to purchase or sell. If the home were rebuilt, the dollar amount necessary to do so would make up the replacement cost.
Myth: Specific methods, such as the price per square foot, are the ways appraisers use to ascertain the value of a home.
Reality: There are many differing ways that an appraiser will use to make a full analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the values of recently sold comparable properties.
Myth: When the economy is strong and the sales prices of properties are found to be appreciating by a certain percentage, the other homes in the vicinity can be expected to increase based on that same percentage.
Reality: The appreciation of a specific house is always determined on a case-by-case basis, factoring in information on comparable houses and other relevant elements. It doesn't matter if the economy is doing well or declining.
Myth: You can commonly find what a home is worth simply by looking at the exterior.
Reality: Property value is determined by a multitude of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. Obviously, none of these factors can be derived just by viewing the home from the exterior.
Myth: Because the consumer is the person who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Reality: Legally, the document is owned by the lender unless the lender releases their interest in the appraisal. Consumers must be provided with a version of the report through request due to the Equal Credit Opportunity Act.
Myth: There's no need for home buyers to even care about what the appraisal report contains so long as their lending company is satisfied.
Reality: A consumer should definitely read through their appraisal; there might be some questions or some concerns with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, comprised of useful and often-revealing data - including 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 hire an appraiser unless you are trying to get an assessment of the value of a house during a sales transaction involving a lending agency.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: Appraisal reports are completely different than a home inspection. The purpose of an appraisal report is to arrive at an opinion of market value during the appraisal process and the completion of the appraisal. The point of a home inspector is to approximate the condition of the house and its main components, then compose a report on these conclusions.
