Appraisal myths debunked
It is mandated by legal agencies that an appraiser must be state-licensed to create appraisals for federally-related real estate transactions in New York. You are also entitled by law to request a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should equate to market value.
Fact: It might be that New York, like most states, validates the idea that the assessed value equals the market value; however, this is not always true. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby properties are excellent examples of why there might be a differential in price.
Myth: The opinion of value of a house will change depending upon whether the appraisal is ordered for the buyer or the seller.
Fact: There is no real interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is ordered.
Myth: Any time market value is found, it should equal the replacement cost of the property.
Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a property without being under duress from any outside group to buy or sell. The dollar amount demanded to reconstruct a property is what constitutes the replacement cost.
Myth: There are certain methods that real estate appraisers use to find the value of a property, like the price per square foot.
Fact: There are many differing calculations 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 certain facilities and the opinion of value of recently sold comparable homes.
Myth: When the economy is on the rise and the cost of houses are reported to be rising by a certain percentage, the other houses in the proximity can be expected to increase based on that same percentage.
Fact: Value appreciation of a certain property must be concluded on an individualized basis, factoring in information on comparable houses and other relevant considerations. It doesn't matter if the economy is on the rise or declining.
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Myth: The property's exterior is determinate of the actual price of the home; it is unnecessary to do an interior appraisal.
Fact: There are a multitude of different variables that conclude the value of a house; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these things can be derived simply by viewing the property from the outside.
Myth: Since you're the one funding for the appraisal when applying for the loan to buy or refinance real estate, you own the provided appraisal.
Fact: Legally, the report is owned by the lender unless the lender releases their interest in the report. Home buyers have to be given a version of the appraisal report upon written request due to the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it meets the needs of their lending agency.
Fact: It is a very good idea for home buyers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can double as a record for the future, containing a great deal 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 proximity.
Myth: Appraisers are hired only to assess building values in home sales involving mortgage-lending deals.
Fact: Hiring an appraiser can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A property inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal. The function of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal report. The purpose of a home inspector is to determine the condition of the home and its major components, then create a report on these findings.