Myth: Assessed value will always be the same as market value.
Reality: While most states uphold the concept that assessed value is the same as estimated market value, this generally is not the case. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an prolonged time.
Myth: Depending on whether the appraisal is drawn up for the buyer or the seller, the cost of the home will vary.
Reality: The appraiser has no personal interest in the outcome of the report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement cost of the property should be on par with the market value.
Reality: Market value is found by what a willing buyer would likely pay a willing seller for a certain property, with neither being under duress to buy or sell. The dollar amount needed to rebuild a home is what shows the replacement cost.
Myth: Appraisers use a calculation, such as a certain price per square foot, to arrive at the value of a home.
Reality: Appraisers complete a full analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.
Myth: As houses appreciate by a certain percentage - in a strong economic state - the properties around the appreciating properties are figured to increase by the same amount.
Reality: The appreciation of a specific home must be determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. This is true in good economic times as well as bad.
Myth: Just seeing what the home looks like on its exterior gives an idea of its value.
Reality: There are a number of different factors that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just looking at the home from the outside.
Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to purchase or refinance your house, you own the produced appraisal report.
Reality: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal report. However, consumers must be supplied with a copy of the report upon written request, because of the Equal Credit Opportunity Act.
Myth: Consumers need not care about what is in their document so long as it exceeds the needs of their lending company.
Reality: Only when home buyers look through a copy of their appraisal report can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, filled with 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 area.
Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a house during a sales transaction involving a lending company.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is the same as a home inspection.
Reality: An appraisal report does not fulfill the same purpose as an inspection report. An appraiser finds an opinion of value in the appraisal process and resulting document. A home inspector assesses the condition of the house and its main components and reports these findings.