Appraisal myths debunked
It is enforced by the government that an appraiser needs to be state-licensed to perform appraisals for federally-supported home purchases in New Jersey. Also by law, you have the right to receive a copy of the finished report from your lending agency. Contact SAMRYLEX Real Estate Appraisals and Consulting Services if you have any questions about the appraisal process.
Myth: The value that is ascertained by the appraiser will be the same as the market value.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby houses are exact examples of why this occurs.
Myth: The opinion of value of a home will vary depending upon if the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the outcome of the appraisal and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: Any time market value is found, it should equal the replacement cost of the house.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain property, with neither being under duress to buy or sell. Replacement cost is the dollar amount required to reconstruct a home in-kind.
Myth: There are specific ways that real estate appraisers use to find the cost of a property, such as the price per square foot.
Fact: Appraisers make a full analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable properties.
Myth: When the economy is robust and the value of properties are reported to be rising by a certain percentage, the other houses in the vicinity can be expected to increase based on that same percentage.
Fact: Any value at which an appraiser arrives in regards to a particular property is always personalized, based on certain factors found from the data of comparable houses and other considerations within the property itself. It doesn't matter if the economy is on the rise or declining.
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Myth: Just seeing what the home looks like on the outside gives an excellent idea of its worth.
Fact: House value is concluded by a multitude of variables, including location, condition, improvements, amenities, and market trends. An outside-only inspection obviously can't provide all of the information required.
Myth: Because the consumer is the one who puts up the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the appraisal. Because of the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be given it by their lending company.
Myth: There's no need for consumers to even care about what the appraisal contains so long as their lending institution is fine with the contents therein.
Fact: It is very important for home buyers to go through a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal can double as a record for the future, containing an incredible amount of information - 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 proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lending agency.
Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: You don't 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 reason behind an appraisal is to find an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will compose a report that will explain the condition of the house and its major components and possible damage.