Appraisal myths & facts

Legally, a real estate appraiser must be state certified to create substantiated appraisal reports for federally-backed sales. Also by law, you have the ability to demand a copy of the completed appraisal from your lending agency. Contact Maxwell Appraisal Services if you have any concerns about the appraisal procedure.

Myth: Assessed value will always be the same as to market value.

Fact: It is probable that California, like most states, supports the idea that the assessed value equals the market value; however, this is not always true. Interior remodeling that the assessor has not investigated and a lack of reassessment on nearby properties are exact examples of why the price can vary.

Myth: Depending on whether the appraisal is written for the buyer or the seller, the appraised value of the property will vary.

Fact: There is no personal interest on the part of the appraiser in the result of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.

Myth: The replacement value of the property will be is on par with the market value.

Fact: Without any pressure 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 be the replacement cost.

Myth: There are certain methods that real estate appraisers use to find the opinion of value of a home, like the price per square foot.

Fact: Appraisers make a comprehensive analysis of all factors in consideration to the worth of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.

Myth: In a powerful economy - when the values of properties in a given area are reported to be appreciating by a particular percentage - the worth of individual homes in the vicinity can be expected to appreciate by that same percentage.

Fact: Any cost at which an appraiser concludes in regards to a certain home is always individualized, based on certain factors found from the data of comparable houses and other considerations within the house itself. It doesn't matter if the economy is doing well or declining.

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Myth: Just examining what the house looks like on the outside gives an excellent idea of its worth.

Fact: There are a multitude of different variables that determine the value of a house; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by examining the house from the outside.

Myth: Because the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. By the Equal Credit Opportunity Act, any consumer demanding a copy of the appraisal report must be given one by their lending agency.

Myth: It doesn't matter to consumers what's in the appraisal report so long as it meets the requirements of their lending agency.

Fact: Only if consumers examine 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. There is a wealth of data stored in an appraisal that can be useful to the home buyer in the future, such as 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 region.

Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the price of a house during a sales transaction involving a lending institution.

Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot of different services including - but definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: There's no need to get an appraisal if you order a home inspection.

Fact: An appraisal report does not fulfill the same purpose as an inspection report. The purpose of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal. A home inspector determines the condition of the house and its major components and reports their findings.