Common myths about appraising
It is required by the government that an appraiser must be state-licensed to create appraisal reports for federally-related property sales in California. You also have the right to demand a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.
Myth: The value that is ascertained by the appraiser will be the same as the market value.
Fact: While most states support the idea that assessed value is the same as estimated market value, this commonly is not the case. Generally when interior remodeling has been done and the assessor is has not investigated the improvement or other houses in the area have not been reassessed for quite some time, it may vary wildly.
Myth: The appraised value of a home will change depending upon if the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no vested interest in the outcome of the appraisal and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Market value will approximate replacement cost.
Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a home without being under pressure from any external party to purchase or sell. The dollar amount needed to rebuild a home is what forms the replacement cost.
Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the value of a house.
Fact: Appraisers make a comprehensive analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent costs of comparable homes.
Myth: When the economy is strong and the sales prices of homes are found to be increasing by a certain percentage, the other houses in the neighborhood can be expected to rise based on that same percentage.
Fact: Worth increase of a specific house is always determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. It makes no difference if the economy is strong or on the decline.
Have other questions about appraisers, appraising or real estate in Santa Clara County or San Jose, CA?Contact our professional staff
Myth: Just seeing what the house looks like on the outside gives an idea of its worth.
Fact: To determine an accurate price beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the information needed.
Myth: Considering that the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report is theirs.
Fact: The appraisal report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the appraisal report. Consumers must be given a version of the report through request due to the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their report so long as it satisfies the requirements of their lending company.
Fact: Only if home buyers read a copy of their appraisal 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. There is a great deal of data contained in an appraisal that should be useful to the home buyer 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 home needs its cost estimated in a lender-based sales transaction.
Fact: Hiring an appraiser can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal is the same as a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal report. The point of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will create a report that will determine the condition of the home and its major components and possible damage.