Myth: Assessed value should equate to market
value.
Reality: While most states support the concept that
assessed value approximate estimated market value, this
often is not the case. Examples include when interior
remodeling has occurred and the assessor is unaware of the
improvements, or when properties in the vicinity have not
been reassessed for an extended period.
Myth: The appraised value of a property will
vary, depending upon whether the appraisal is conducted
for the buyer or the seller.
Reality: The appraiser has no vested interest in
the outcome of the appraisal and should render services
with independence, objectivity and impartiality - no
matter for whom the appraisal is conducted.
Myth: Market value should approximate
replacement cost.
Reality: Market value is based on what a willing
buyer likely would pay a willing seller for a particular
property, with neither being under pressure to buy or
sell. Replacement cost is the dollar amount required to
reconstruct a property in-kind.
Myth: Appraisers use a formula, such as a
specific price per square foot, to figure out the value of
a home.
Reality: Appraisers make a detailed analysis of all
factors pertaining to the value of a home including its
location, condition, size, proximity to facilities and
recent sale prices of comparable properties.
Myth: In a robust economy - when the sales
prices of homes in a given area are reported to be rising
by a particular percentage - the value of individual
properties in the area can be expected to appreciate by
that same percentage.
Reality: Value appreciation of a specific property
must be determined on an individualized basis, factoring
in data on comparable properties and other relevant
considerations. This is true in good times as well as bad.
Myth: You generally can tell what a property is
worth simply by looking at the outside.
Reality: Property value is determined by a number
of factors, including location, condition, improvements,
amenities, and market trends.
Myth: Because consumers pay for appraisals when
applying for loans to purchase or refinance real estate,
they own their appraisal.
Reality: The appraisal is, in fact, legally owned
by the lender - unless the lender "releases its
interest" in the document. However, consumers must be
given a copy of the appraisal report, upon written
request, under the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what
is in the appraisal document so long as it satisfies the
needs of their lending institution.
Reality: Only if consumers read a copy of their
appraisal can they double-check its accuracy and question
the result. Also, it makes a valuable record for future
reference, containing useful and often-revealing
information - including 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: Appraisers are hired only to estimate real
estate property values in property sales involving
mortgage-lending transactions.
Reality: Depending upon their qualifications and
designations, appraisers can and do provide a variety of
services, including advice for estate planning, dispute
resolution, zoning and tax assessment review and
cost/benefit analysis.
Myth: An Appraisal is the same as a home
inspection.
Reality: An Appraisal does not serve the same
purpose as an inspection. The Appraiser forms an opinion
of value in the Appraisal process and resulting report. A
home inspector determines the condition of the home and
its major components and reports these findings.
