Myth: Market value has to be the same as the assessed value of the property.
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 remodeling has happened and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an prolonged time.
Myth: The appraised value of a house will vary depending upon if the appraisal is provided for the buyer or the seller.
Reality: There is no vested interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should equal the replacement cost of the house.
Reality: Market value is based on what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under undue influence to buy or sell. If the home were rebuilt, the dollar amount needed to do so would be the replacement cost.
Myth: Certain methods, like the price per square foot, are the methods appraisers use to determine the value of a home.
Reality: Appraisers complete a full 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 homes.
Myth: When the economy is strong and the sales prices of properties are found to be rising by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Reality: All appreciation of value is on a case-by-case basis, concluded by information on relevant elements and the data of comparable houses. It makes no difference if the economy is good or on the decline.
Myth: Just seeing what the property looks like on its exterior gives an idea of its value.
Reality: There are a multitude of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found just by examining the home from the exterior.
Myth: Since you're the one funding for the appraisal report when applying for the loan to purchase or refinance your house, you own the ordered appraisal report.
Reality: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal report. Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be provided with one by their lending company.
Myth: There's no point for consumers to even concern themselves with what the appraisal contains so long as their lending company is fine with the contents therein.
Reality: A home buyer should definitely inspect their appraisal; there may be some questions or some concerns with the accuracy of the appraisal report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, since it contains an exorbitant amount of information - including, but certainly 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 proximity.
Myth: The only reason someone would order an appraisal is if a house needs its value estimated in a lender-based sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: You shouldn't need to get an appraisal if you order a home inspection.
Reality: Appraisal reports are nothing like a home inspection report. The point of an appraisal is to conclude upon an opinion of market value during the appraisal process and the production of the appraisal report. The purpose of a home inspector is to assess the condition of the home and its main components, then produce a report on their conclusions.
