Appraisal myths & facts
It is required by law that an appraiser is required to be state-licensed to create appraisal reports for federally-related home purchases in Pennsylvania. Also by law, you have the right to request a copy of the completed report from your lender. Contact Nordquist Appraisal LLC if you have any concerns about the appraisal procedure.
Myth: Market value must be similar to the assessed value of the property.
Fact: While most states support the suggestion that assessed value is the same as estimated market value, this commonly is not the case. Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are excellent examples of why the price can vary.
Myth: The value of a house will be different depending upon if the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value should equate to replacement cost.
Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under influence from any external group to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.
Myth: There are specific methods that appraisers use to find the value of a property, like the price per square foot.
Fact: There are many different processes that an appraiser will use to make a comprehensive investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to certain facilities and the worth of recently sold comparable homes.
Myth: As houses increase their worth by a specific percentage - in a strong economic state - the homes in proximity are expected to increase by the same amount.
Fact: Any worth at which an appraiser arrives in regards to a specific home is always individualized, based on certain factors derived from the information of comparable homes and other specifications within the home itself. It makes no difference if the economy is good or terrible.
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Myth: You can commonly tell what a house is worth simply by looking at the exterior.
Fact: To find an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no possible way to get all of this data from just inspecting the property from the exterior.
Myth: Because the consumer is the party who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Fact: The report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the document. Because of the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lending company.
Myth: There's no need for home buyers to even care about what the appraisal report contains so long as their lender is fine with the contents therein.
Fact: It is almost imperative for home buyers to read a copy of their appraisal so that they can verify the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data stored in an appraisal report that can 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 region.
Myth: The only reason someone would order an appraisal is if a property needs its value estimated in a lender-based sales transaction.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide 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: A house inspection serves the same purpose as an appraisal.
Fact: Appraisal reports have almost nothing in common with a home inspection report. The point of an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal. House inspectors will write a report that will determine the condition of the home and its major components and possible damage.