Common myths about appraising
It is mandated by the government that an appraiser must be state-licensed to produce appraisals for federally-supported real estate transactions in California. Also by law, you have the right to demand a copy of the completed appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.
Myth: Assessed value generally will equate to market value.
Fact: While most states support the idea that assessed value equates estimated market value, this usually is not the case. Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby houses are perfect examples of why there might be a differential in price.
Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the home will vary.
Fact: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, regardless for whom the appraisal is conducted.
Myth: Market value will approximate replacement cost.
Fact: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. The dollar amount necessary to rebuild a home is what constitutes the replacement cost.
Myth: Appraisers use a calculation, like a certain price per square foot, to arrive at the value of a home.
Fact: Appraisers complete a detailed analysis of all factors pertaining to the worth of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.
Myth: As homes appreciate by a specific percentage - in a robust economic state - the houses around the appreciating properties are figured to appreciate by the same amount.
Fact: All increase of price is on an individual basis, concluded by data on relevant considerations and the data of comparable houses. It makes no difference whether the economy is strong or on the decline.
Have other questions about appraisers, appraising or real estate in Orange County or Mission Viejo, CA?Contact our professional staff
Myth: You can usually see what a house is worth simply by looking at the outside.
Fact: There are a number of different factors that show the value of a house; these factors include area, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the data necessary.
Myth: Since you're the one providing the money for the appraisal when applying for your loan to purchase or refinance real estate, you own the produced appraisal report.
Fact: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending agency that ordered the appraisal. Consumers must be supplied with a version of the appraisal report upon written request as per the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even concern themselves with what the report contains so long as their lending institution is satisfied.
Fact: Only if consumers look over 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. Also, the appraisal report makes a valuable record for future reference, containing useful and often-revealing 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 vicinity.
Myth: Appraisals are ordered only to estimate building values in property sales involving mortgage-lending transactions.
Fact: Based upon their qualifications and designations, appraisers can and often do provide a series 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: Appraisal reports are completely different than a home inspection. The task of the appraiser is to arrive at an opinion of value in the appraisal process and through producing the report. A home inspector analyzes the condition of the house and its major components and reports their findings.