Appraisal myths & facts
By law, an appraiser needs to be state-licensed to perform appraisals for federally-supported purchases. The law gives you the right to get a copy of your finished report from your lender after it has been provided. Contact Clark Lunde if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser should be the same as the market value.
Fact: It might be that California, like most states, validates the suggestion that the assessed value is the same as the market value; however, this certainly varies based on state-to-state. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when properties in the area have not been reassessed for an extended period of time.
Myth: Depending on if the appraisal is written for the buyer or the seller, the appraised value of the property will vary.
Fact: The opinion of value of the house does not affect the salary of the appraiser; as such, the appraiser has no vested interest in the worth of the house. What this means is he will render services with impartiality and independence regardless for whom the appraisal is produced.
Myth: Market value will equate to replacement cost.
Fact: Without any suggestion from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular house. If the home were rebuilt, the dollar amount needed to do so would form the replacement cost.
Myth: There are specific ways that real estate appraisers use to show the cost of a home, like the price per square foot.
Fact: There are many numerous methods that an appraiser will use to make a comprehensive investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to specific facilities and the cost of recently sold comparable houses.
Myth: As houses increase their worth by a certain percentage - in a strong economy - the houses in proximity are expected to appreciate by the same amount.
Fact: All increase of value is on a case-by-case basis, found by information on relevant conditions and the data of comparable homes. This is true in good economic times as well as bad.
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Myth: You can generally tell what a property is worth simply by looking at the outside.
Fact: There are a multitude of different variables that conclude the value of a house; these factors include location, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the information required.
Myth: Since you're the one paying for the appraisal report when applying for the loan to purchase or refinance real estate, you own the ordered appraisal.
Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal report. Home buyers must be supplied with a version of the document upon written request due to the Equal Credit Opportunity Act.
Myth: There's no point for consumers to even care about what the appraisal report contains so long as their lending institution is satisfied.
Fact: Only if consumers examine a copy of their report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, containing a great deal 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 area.
Myth: The only reason someone would hire an appraiser is if a property needs its cost assessed in a lender-based sales transaction.
Fact: Ordering an appraisal can fulfill a variety of wants 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.
Fact: An appraisal does not fulfill the same purpose as an inspection report. The job of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. A home inspector assesses the condition of the house and its main components and reports these findings.