Appraisal myths debunked
It is enforced by law that an appraiser needs to be state-licensed to write appraisals for federally-supported home purchases in Pennsylvania. Also by law, you have the right to demand a copy of the finished report from your lender. Contact us if you have any concerns about the appraisal process.
Myth: Assessed value should be the same as to market value.
Fact: While most states support the suggestion that assessed value equates estimated market value, this usually is not the case. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby properties are prime examples of why this occurs.
Myth: The buyer or the seller sometimes may have some pull in the value of the house depending upon for whom the appraiser is working.
Fact: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is established, it should equate to the replacement cost of the house.
Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell. If the home were rebuilt, the dollar amount necessary to do so would set the replacement cost.
Myth: Certain formulae, such as the price per square foot, are the methods appraisers use to arrive at the cost of a property.
Fact: There are many numerous ways that an appraiser will use to make an in-depth analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable houses.
Myth: In a robust economy - when the costs of houses in a given region are reported to be appreciating by a certain percentage - the worth of individual homes in the proximity can be expected to appreciate by that same percentage.
Fact: Any worth at which an appraiser arrives in regards to a particular house is always personalized, based on certain factors found from the data of comparable homes and other considerations within the property itself. It doesn't matter if the economy is on the rise or declining.
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Myth: Just seeing what the house looks like on the outside gives an excellent idea of its worth.
Fact: House value is concluded by a multitude of variables, including area, condition, improvements, amenities, and market trends. There's no real way to get all of this information from simply examining the home from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance their property, they legally own their appraisal.
Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. Consumers must be supplied with a version of the appraisal report upon written request as per the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their appraisal so long as it satisfies the necessities of their lending agency.
Fact: A home buyer should definitely read through their report; there could be some questions or some worries with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, containing helpful and often-revealing data - including 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 hire an appraiser is if a house needs its worth assessed in a lender-based sales transaction.
Fact: Based upon their qualifications and designations, appraisers can and may provide a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: An appraisal does not fulfill the same purpose as an inspection report. An appraiser finds an opinion of value in the appraisal process and resulting appraisal. The purpose of a home inspector is to approximate the condition of the house and its main components, then compose a report on these conclusions.