Appraisal myths & facts

It is mandated by legal agencies that a real estate appraiser is required to be state-licensed to offer appraisal reports for federally-related home sales in California. You also have the right to demand a copy of the finished appraisal report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: The value that is assessed by the appraiser must be equivalent to the market value.

Fact: It might be that California, like most states, validates the suggestion that the assessed value equates to the market value; however, this is sometimes the exception rather than the rule. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when houses in the vicinity have not been reassessed for an prolonged period of time.

Myth: The buyer or the seller often will have an influence in the value of the house depending upon for whom the appraiser is working.

Fact: The cost of the home does not affect the payment of the appraiser; as a result, the appraiser has no preconceived interest in the value of the property. What this means is he will provide task with impartiality and independence regardless for whom the appraisal is produced.

Myth: The replacement cost of the property is always is on par with the market value.

Fact: Without any pressure from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the property were reconstructed, the dollar amount necessary to do so would set the replacement cost.

Myth: Specific methods, such as the price per square foot, are the ways appraisers use to arrive at the cost of a home.

Fact: An appraisal is an assertion of data concluded from the property's size, location, proximity to undesirable facilities, the condition of the property and the price of recent comparable sales. You can depend on Nedra Colvin Appraisal Services's staff to be forthright in assessing this information.

Myth: As homes increase their worth by a specific percentage - in a strong economy - the houses around the appreciating properties are figured to appreciate by the same amount.

Fact: Any cost at which an appraiser concludes concerning a specific home is always individualized, based on certain factors found from the data of comparable homes and other considerations within the home itself. This is true in fair economic times as well as poor.

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Myth: Just examining what the home looks like on its exterior gives a good idea of its worth.

Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no possible way to get all of this information from just looking at the house from the exterior.

Myth: Since the consumer is the party who puts up the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be provided with it by their lending agency.

Myth: There's no need for consumers to even concern themselves with what the appraisal report contains so long as their lending agency is fine with the contents therein.

Fact: Only if home buyers examine a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can serve as a record for the future, since it contains an incredible amount of data - including, but certainly 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: The only reason someone would order an appraisal is if a house needs its price assessed in a lender-based sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and will perform a multitude of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: There's no need to get an appraisal if you have had a home inspection.

Fact: Appraisal reports have almost nothing in common with a home inspection report. The task of the appraiser is to find an opinion of value in the appraisal process and through creating the report. A home inspector determines the condition of the building and its major components and reports these findings.