Appraisal myths & facts
By law, an appraiser needs to be state-licensed to produce appraisals for federally-related purchases. The law gives you the right to receive a copy of your finished report from your lender after it has been produced. Contact The Welter Appraisal Group if you have any concerns about the appraisal procedure.
Myth: The value that is assessed by the appraiser should be the same as the market value.
Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Examples include when interior remodeling has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an extended period.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the appraised value of the property will vary.
Fact: The cost of the home does not affect the pay of the appraiser; as a result, the appraiser has no preconceived interest in the opinion of value of the house. Obviously, he will conduct services with impartiality and objectivity regardless for whom the appraisal is produced.
Myth: Any time market value is established, it should equate to the replacement cost of the property.
Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. The dollar amount demanded to rebuild a house is what shows the replacement cost.
Myth: There are specific ways that real estate appraisers use to find the opinion of value of a house, such as the price per square foot.
Fact: There are many different methods that an appraiser will use to make a detailed analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable houses.
Myth: As homes appreciate by a specific percentage - in a robust economy - the homes within the same neighborhood are expected to increase by the same amount.
Fact: Price increase of a certain house has to be determined on an individualized basis, factoring in information on comparable properties and other relevant specifications within the house itself. It doesn't matter if the economy is on the rise or declining.
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Myth: You can commonly see what a house is worth simply by looking at the outside.
Fact: To determine an accurate price beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just looking at the house from the exterior.
Myth: Since the consumer is the one 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: Legally, the document is owned by the lending company unless the lender releases their interest in the document. However, home buyers must be supplied with a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their document so long as it exceeds the necessities of their lending institution.
Fact: Only if home buyers examine a copy of their report can they ensure its accuracy and possibly need to question the result. 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 report that will probably 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 area.
Myth: The only reason someone would hire an appraiser is if a house needs its value estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and do perform a variety of 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 report does not serve the same purpose as an inspection. An appraiser forms an opinion of value in the appraisal process and resulting appraisal. House inspectors will produce a report that will express the condition of the house and its major components and possible damage.