Appraisal myths & facts
It is required by legal agencies that an appraiser needs to be state-licensed to write appraisals for federally-supported real estate sales in Alabama. Also by law, you are entitled to receive a copy of the completed appraisal report from your lending agency. Contact us if you have any concerns about the appraisal procedure.
Myth: Market value has to be equivocal to the assessed value of the property.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an extended period.
Myth: Depending on if the appraisal is written for the buyer or the seller, the value of the house will vary.
Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is ordered.
Myth: Market value should approximate replacement cost.
Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a particular home, with neither being under duress to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: Certain methods, such as the price per square foot, are what appraisers use to come to the value of a house.
Fact: There are many different ways that an appraiser will use to make a detailed analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the cost of recently sold comparable houses.
Myth: As properties appreciate by a certain percentage - in a strong economy - the homes in proximity are figured to increase by the same amount.
Fact: Price appreciation of a certain house is always concluded on an individualized basis, factoring in information on comparable homes and other relevant specifications within the house itself. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Elmore County or Montgomery, AL?Contact us
Myth: You can usually find what a property is worth simply by looking at the outside.
Fact: To find an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived just by looking at the property from the outside.
Myth: Since you're the one funding for the appraisal when applying for the loan to buy or refinance real estate, you own the ordered appraisal.
Fact: Unless a lending agency releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. However, consumers have to be supplied with a copy of the report upon written request, due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the report so long as it meets the needs of their lending company.
Fact: A consumer should definitely inspect their document; there may be some questions or some concerns with the accuracy of the analysis that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an appraisal report that will probably 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 proximity.
Myth: There is no reason to hire an appraiser unless you are trying to get an assessment of the value of a property during a sales transaction involving a lending company.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide a multitude 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 don't have to get an appraisal if you get a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal report. An appraiser finds an opinion of value in the appraisal process and resulting report. House inspectors will write a report that will determine the condition of the property and its major components and possible damage.