Myth: Market value will always be the same as the assessed value of the property.
Reality: It could be that California, like most states, supports the idea that the assessed value equates to the market value; however, this is not often the case.
Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an prolonged period of time.
Myth: The opinion of value of a property will vary depending upon if the appraisal is provided for the buyer or the seller.
Reality: The price of the property does not affect the payment of the appraiser; due to this, the appraiser has no personal interest in the price of the house. Obviously, he will complete his job with impartiality and independence regardless of for whom the appraisal is created.
Myth: Market value should equal replacement cost.
Reality: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a property without being under pressure from any outside group to purchase or sell.
The dollar amount demanded to rebuild a home is what constitutes the replacement cost.
Myth: Appraisers use a formula, like a specific price per square foot, to arrive at the value of a house.
Reality: Appraisers complete an exhaustive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: In a robust economy - when the sales prices of houses in a given region are found to be rising by a certain percentage - the values of individual homes in the area can be expected to increase by that same percentage.
Reality: All increase of value is on a case-by-case basis, determined by information on relevant conditions and the data of comparable properties.
It makes no difference if the economy is strong or on the decline.
Myth: The property's exterior is determinate of the expected price of the property; there is no need to do an interior appraisal.
Reality: There are a multitude of different variables that determine the value of a home; these factors include location, condition, improvements, amenities, and market trends.
An exterior inspection certainly 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 buy or refinance real estate, you own the provided appraisal report.
Reality: Unless a lender releases its interest in the appraisal report, it is legally owned by the lending company that ordered the appraisal.
However, consumers must be given a copy of the document upon written request, because of the Equal Credit Opportunity Act.
Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lender is satisfied.
Reality: Only when consumers check out a copy of their appraisal report can they verify its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a wealth of information stored in an appraisal report that should be useful to the consumer 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 vicinity.
Myth: Appraisals are ordered only to assess building values in property sales involving mortgage-lending deals.
Reality: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't need to get an appraisal if you get a home inspection.
Reality: A home inspection serves a completely different purpose than an appraisal.
The purpose of an appraisal report is to conclude upon an opinion of market value during the appraisal process and the completion of the appraisal report.
House inspectors will produce a report that will show the condition of the property and its major components and possible damage.
