Appraisal myths debunked
It is mandated by law that a real estate appraiser must be state-licensed to write appraisal reports for federally-supported real estate purchases in Florida. The law allows you to receive a copy of your completed appraisal from your lender after it has been produced. Contact A.M.O. Appraisals, Inc. if you have any questions about the appraisal procedure.
Myth: The value that is ascertained by the appraiser must be exactly the same as the market value.
Fact: While most states back the suggestion that assessed value is the same as estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an prolonged period of time.
Myth: Depending on if the appraisal is done for the buyer or the seller, the cost of the property will vary.
Fact: The opinion of value of the property does not affect the salary of the appraiser; as such, the appraiser has no pressured interest in the cost of the house. This means that he will provide services with impartiality and independence regardless for whom the appraisal is created.
Myth: Market value will equal replacement cost.
Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home. If the home were rebuilt, the dollar amount required to do so would form the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the opinion of value of a property, such as the price per square foot.
Fact: Appraisers make a full analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent costs of comparable properties.
Myth: In a powerful economy - when the prices of properties in a given region are reported to be increasing by a particular percentage - the prices of individual properties in the vicinity can be expected to rise by that same percentage.
Fact: Cost increase of a certain home has to be concluded on an individualized basis, factoring in data on comparable properties and other relevant considerations. It doesn't matter if the economy is doing well or declining.
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Myth: Just seeing what the property looks like on its exterior gives an idea of its value.
Fact: To conclude an accurate price beyond all doubt, an appraiser must assess the property on a variety of factors based on location, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information necessary.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to purchase or refinance real estate, you own the produced appraisal.
Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. However, home buyers must be provided with a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.
Myth: There's no need for home buyers to even care about what the appraisal contains so long as their lending company is fine with the contents therein.
Fact: Only if home buyers look over a copy of their appraisal can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, comprised of helpful and often-revealing information - 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 area.
Myth: The only reason someone would hire an appraiser is if a house needs its price estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and may perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is the same as a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. The purpose of a home inspector is to find the condition of the property and its major components, then produce a report on their conclusions.