Some Myths and Facts About
                              Real Estate Appraisals and Appraisers

                     

    Myth: Assessed value should equate to market value.
    Fact: While most states support the concept that assessed value approximate estimated market
    value, this often is not the case. Examples include when interior remodeling has occurred and the
    assessor is unaware of the improvements, or when properties in the vicinity have not been
    reassessed for an extended period.

    Myth: The appraised value of a property will vary, depending upon whether the appraisal is
    conducted for the buyer or the seller.
    Reality: The appraiser has no vested interest in the outcome of the appraisal and should render
    services with independence, objectivity and impartiality - no matter for whom the appraisal is
    conducted.

    Myth: Market value should approximate replacement cost.
    Reality: Market value is based on what a willing buyer likely would pay a willing seller for a
    particular property, with neither being under pressure to buy or sell (Arms Length Transaction).
    Replacement cost is the dollar amount required to reconstruct a property in-kind.

    Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of
    a home.
    Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home
    including its location, condition, size, proximity to facilities and recent sale prices/$$/SF, of
    comparable properties.

    Myth: In a robust economy - when the sales prices of homes in a given area are reported to be
    rising by a particular percentage - the value of individual properties in the area can be expected to
    appreciate by that same percentage.
    Reality: Value appreciation of a specific property must be determined on an individualized basis,
    factoring in data on comparable properties and other relevant considerations. This is true in good
    times as well as bad.

    Myth: You generally can tell what a property is worth simply by looking at the outside.
    Reality: Property value is determined by a number of factors, including location, condition,
    improvements, amenities, and market trends.

    Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance
    real estate, they own their appraisal.
    Reality: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its
    interest" in the document. However, consumers must be given a copy of the appraisal report,
    upon written request, under the Equal Credit Opportunity Act.

    Myth: Consumers need not be concerned with what is in the appraisal document so long as it
    satisfies the needs of their lending institution.
    Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and
    question the result. Also, it makes a valuable record for future reference, containing useful 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 vicinity.

    Myth: Appraisers are hired only to estimate real estate property values in property sales involving
    mortgage-lending transactions.
    Reality: Depending upon their qualifications and designations, appraisers can and do provide a
    variety 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.
    Reality: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an
    opinion of value in the Appraisal process and resulting report. A home inspector determines the
    condition of the home and its major components and reports these findings.









           


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