Common myths about appraising
By law, an appraiser needs to be state-licensed to perform appraisals for federally-related purchases. The law gives you the right to acquire a copy of your finished report from your lending agency after it has been provided. Contact Sutherland Appraisal Services, Inc. if you have any concerns about the appraisal process.
Myth: Assessed value should be the same as to market value.
Fact: While most states uphold the suggestion that assessed value approximates estimated market value, this generally is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period of time.
Myth: The buyer or the seller can have an influence in the cost of the home depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.
Myth: Any time market value is found, it should be similar to the replacement cost of the home.
Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a certain house, with neither being under duress to buy or sell. The dollar amount required to reconstruct a home is what shows the replacement cost.
Myth: Certain formulae, like the price per square foot, are the methods appraisers use to ascertain the worth of a property.
Fact: Appraisers make a full analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: In a powerful economy - when the worth of houses in a given county are found to be increasing by a certain percentage - the values of individual houses in the proximity can be expected to appreciate by that same percentage.
Fact: Value increase of a certain property has to be determined on an individualized basis, factoring in information on comparable houses and other relevant elements. This is true in excellent economic times as well as bad.
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Myth: Just seeing what the home looks like on the outside gives an excellent idea of its worth.
Fact: House worth is concluded by a number of variables, including location, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the data necessary.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to purchase or refinance your home, you own the produced appraisal report.
Fact: The report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal. Under the Equal Credit Opportunity Act, any home buyer requesting a copy of the report must be provided with one by their lender.
Myth: Home buyers need not care about what is in their report so long as it exceeds the requirements of their lending agency.
Fact: A home buyer should definitely look through their appraisal; there could be some questions or some worries about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an appraisal report that should be useful to the home buyer 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: The only reason someone would hire an appraiser is if a house needs its value estimated in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and do perform a variety of different 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.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The task of the appraiser is to conclude 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 their findings.