Myth: Market value should be equivocal to the assessed value of the property.
Reality: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always.
Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when houses in the area have not been reassessed for an extended period.
Myth: The opinion of value of a house will differ depending upon if the appraisal is produced for the buyer or the seller.
Reality: 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, no matter of for whom the appraisal is ordered.
Myth: Any time market value is established, it should equal the replacement cost of the house.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a particular house, with neither being under pressure to buy or sell.
Replacement cost is the dollar amount required to reconstruct a property in-kind.
Myth: Certain formulae, like the price per square foot of the property, are the ways appraisers use to determine the value of a property.
Reality: An appraisal is an assertion of data concluded from the house's size, location, proximity to undesirable facilities, the condition of the property and the values of recent comparable sales. You can count on Bearing Commercial Appraisal's staff to be honest in assessing this information.
Myth: When the economy is strong and the sales prices of houses are found to be appreciating by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Reality: The appreciation of a specific property must be concluded on an individualized basis, factoring in data on comparable houses and other relevant considerations.
It makes no difference if the economy is strong or poor.
Myth: You can usually tell what a house is worth simply by looking at the exterior.
Reality: To find a solid value beyond all doubt, an appraiser must examine the home on a variety of factors based on location, condition, improvements, amenities, and current market trends.
Obviously, none of these factors can be derived simply by looking at the house from the exterior.
Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance their home, they own their appraisal report.
Reality: Unless a lender releases its interest in the report, it is legally owned by the lending company that ordered the appraisal.
Due the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be given it by their lending agency.
Myth: It doesn't concern consumers what's in the appraisal so long as it meets the requirements of their lending company.
Reality: It is a very good idea for consumers to go through a copy of their report so that they can double-check the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of data stored in an appraisal report that could be useful to the consumer 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 vicinity.
Myth: Appraisals are ordered only to estimate real estate property values in house sales involving mortgage-lending transactions.
Reality: Based upon their qualifications and designations, appraisers can and often do provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection report.
Reality: Appraisal reports have almost nothing in common with a home inspection.
The purpose of the appraiser is to come to an opinion of value in the appraisal process and through writing the report.
The purpose of a home inspector is to assess the condition of the property and its main components, then produce a report on their findings.