Appraisal myths & facts

Legally, a real estate appraiser needs to be state certified to produce legitimate real estate appraisals for federally-related sales. Also by law, you have the right to demand a copy of the completed appraisal report from your lending agency. Contact Community Appraisal if you have any questions about the appraisal procedure.

Myth: Assessed value will always equate to market value.

Fact: It could be that Michigan, like most states, supports the common myth that the assessed value equals the market value; however, this is not often the case. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby properties are prime examples of why this occurs.

Myth: Depending on if the appraisal is provided for the buyer or the seller, the cost of the property will vary.

Fact: The opinion of value of the property does not affect the payment of the appraiser; due to this, the appraiser has no personal interest in the cost of the home. Obviously, he will complete his task with impartiality and objectivity regardless for whom the appraisal is conducted.

Myth: Any time market value is established, it should be similar to the replacement cost of the house.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a property without being under influence from any outside party to purchase or sell. Replacement value is the dollar amount necessary to reconstruct a house in-kind.

Myth: Certain methods, such as the price per square foot of the property, are the methods appraisers use to ascertain the cost of a home.

Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.

Myth: In a powerful economy - when the costs of homes in a given neighborhood are found to be increasing by a particular percentage - the prices of individual homes in the area can be expected to rise by that same percentage.

Fact: All increase of worth is on a case-by-case basis, concluded by information on relevant considerations and the data of comparable homes. It makes no difference if the economy is excellent or terrible.

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Myth: The property's exterior is determinate of the actual value of the house; there is no need to do an interior inspection.

Fact: To find an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply inspecting the property from the outside.

Myth: Since you're the one providing the money for the appraisal when applying for the loan to purchase or refinance your house, you own the ordered appraisal report.

Fact: Unless a lending agency releases its interest in the document, it is legally owned by the lending company that purchased the appraisal. Because of the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given it by their lender.

Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the needs of their lender.

Fact: Only if consumers examine a copy of their report can they double-check 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 report makes a valuable record for future reference, containing useful and often-revealing data - 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: The only reason someone would hire an appraiser is if a house needs its value assessed in a lender sales transaction.

Fact: Appraisers can have many different qualifications and designations which allow them to perform a series 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 report is the same as a home inspection report.

Fact: An appraisal report does not serve the same purpose as an inspection. An appraiser forms an opinion of value in the appraisal process and resulting report. House inspectors will create a report that will determine the condition of the property and its major components and possible damage.