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Common myths about appraising

Legally, an appraiser has to be state certified to write substantiated appraisal reports for federally-related purchase. You have the ability to acquire a copy of the completed appraisal from your lending agency. Contact Russell Appraisal Service if you have any concerns about the appraisal procedure.

Myth: Assessed value should always equate to market value.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are exact examples of why this occurs.

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

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

Myth: Market value should equate to replacement cost.

Fact: Market value is arrived at through what a willing buyer would likely pay a willing seller for a particular home, with neither being under undue influence to buy or sell. Replacement cost is the dollar amount required to rebuild a property in-kind.

Myth: Specific methods, like the price per square foot, are what appraisers use to ascertain the worth of a house.

Fact: There are many varied ways that an appraiser will use to make a detailed analysis of every factor in consideration of the house, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.

Myth: When the economy is strong and the value of houses are found to be appreciating by a certain percentage, the other houses in the neighborhood can be expected to increase based on that same percentage.

Fact: All appreciation of worth is on an individual basis, determined by data on relevant elements and the data of comparable houses. This is true in excellent economic times as well as poor.

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Myth: Just seeing what the property looks like on the outside gives a good idea of its cost.

Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived just by viewing the property from the outside.

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

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

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

Fact: A consumer should definitely look through their appraisal report; there may be some questions or some worries with the accuracy of the appraisal report that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, containing an exorbitant 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 vicinity.

Myth: The only reason someone would order an appraisal is if a home needs its value estimated in a lender-based sales transaction.

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

Myth: A house inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are definitely not the same as a home inspection. The purpose of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the report. A home inspector analyzes the condition of the home and its main components and reports their findings.