Myth: The value that is assessed by the appraiser is required to be exactly the same as the market value.
Reality: While most states uphold the suggestion that assessed value is the same as estimated market value, this generally is not the case. Examples include when interior remodeling has happened and the assessor does not know about the improvements, or when properties in the vicinity have not been reassessed for an prolonged time.
Myth: The opinion of value of a house will vary depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is determined, it should be the same as the replacement cost of the home.
Reality: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific property. If the property were reconstructed, the dollar amount required to do so would make up the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to arrive at the value of a house.
Reality: There are many different formulae that an appraiser will use to make an in-depth analysis of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the values of recently sold comparable homes.
Myth: In a powerful economy - when the sales prices of properties in a given area are reported to be rising by a certain percentage - the prices of individual homes in the vicinity can be expected to increase 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. This is true in excellent economic times as well as poor.
Myth: You can generally see what a house is worth simply by looking at the outside.
Reality: Home value is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the home from the outside.
Myth: Because the consumer is the party who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.
Reality: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the appraisal report. Home buyers must be given a copy of the report upon written request because of the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even worry about what the appraisal contains so long as their lender is satisfied.
Reality: It is almost imperative for home buyers to look at a copy of their appraisal report so that they can double-check the accuracy of the report, in case there is a need to question its veracity. 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 helpful and often-revealing information - 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 vicinity.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending institution.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a multitude of different services including - but 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 get a home inspection.
Reality: Appraisal reports are definitely not the same as a home inspection report. The appraiser concludes on an opinion of value in the appraisal process and resulting document. The job of a home inspector is to determine the condition of the home and its major components, then compose a report on their findings.