Common myths about appraising

Legally, a real estate appraiser must be state certified to create legitimate appraisal reports for federally-supported purchase. You are also entitled by law to acquire a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: Market value will be similar to the assessed value of the property.

Fact: While most states uphold the concept that assessed value is the same as estimated market value, this generally is not the case. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an prolonged time.

Myth: Depending on if the appraisal is ordered for the buyer or the seller, the appraised value of the house will vary.

Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is ordered.

Myth: Any time market value is found, it should equate to the replacement cost of the home.

Fact: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular house. If the home were rebuilt, the dollar amount needed to do so would form the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the value of a home.

Fact: An appraisal is an amalgamation of information based on the home's size, location, proximity to some facilities, the condition of the property and the cost of recent comparable sales. You can depend on Nordquist Appraisal LLC's staff to be professional in assessing this information.

Myth: When the economy is doing well and the value of properties are found to be increasing by a certain percentage, the other properties in the area can be expected to rise based on that same percentage.

Fact: All appreciation of worth is on a case-by-case basis, determined by information on relevant conditions and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.

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Myth: The property's exterior is determinate of the actual price of the property; it is unnecessary to do an interior appraisal.

Fact: To conclude an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just inspecting the home from the exterior.

Myth: Because consumers pay for appraisals when applying for loans to buy or refinance their property, they own their appraisal report.

Fact: Legally, the appraisal is owned by the lender unless the lender releases their interest in the document. Home buyers must be supplied with a version of the report through request because of the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their appraisal so long as it exceeds the requirements of their lending group.

Fact: A home buyer should definitely look through their document; there will probably be some questions or some concerns about the accuracy of the report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing an incredible amount of 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: The only reason someone would order an appraisal is if a home needs its cost estimated in a lender sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and often do provide a lot of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: A home inspection serves the same purpose as an appraisal.

Fact: An appraisal report does not serve the same purpose as an inspection. The task of the appraiser is to find an opinion of value in the appraisal process and through producing the report. A home inspector assesses the condition of the building and its main components and reports these findings.