Appraisal myths debunked
It is enforced by law that a real estate appraiser needs to be state-licensed to produce appraisal reports for federally-related property sales in Michigan. You also have the right to acquire a copy of the completed report from your lender. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should always be equal to market value.
Fact: While most states uphold the concept that assessed value is equal to estimated market value, this usually is not the case. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when properties in the area have not been reassessed for an extended period of time.
Myth: The appraised value of a house will differ depending upon if the appraisal is produced for the buyer or the seller.
Fact: There is no vested interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is created.
Myth: Market value should equate to replacement cost.
Fact: Without any suggestion from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific home. The dollar amount demanded to rebuild a home is what forms the replacement cost.
Myth: There are certain ways that real estate appraisers use to determine the value of a property, such as the price per square foot.
Fact: An appraisal is an assertion of information based on the home's size, location, proximity to certain facilities, the condition of the house and the price of recent comparable sales. You can rely on Community Appraisal's staff to be ethical in assessing this information.
Myth: When the economy is robust and the sales prices of properties are reported to be increasing by a certain percentage, the other properties in the area can be expected to increase based on that same percentage.
Fact: Price appreciation of a certain property has to be concluded on an individualized basis, factoring in information on comparable properties and other relevant elements. It doesn't matter if the economy is on the rise or declining.
Have other questions about appraisers, appraising or real estate in Oakland County or Oakland County, MI?Contact Community Appraisal
Myth: Just looking at what the property looks like on its exterior gives an idea of its value.
Fact: To find an accurate worth beyond all doubt, an appraiser must inspect the house on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these things can be found just by examining the home from the outside.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their property, they legally own their appraisal report.
Fact: Legally, the report is owned by the lending agency unless the lender releases their interest in the document. Home buyers must be given a version of the document through request due to the Equal Credit Opportunity Act.
Myth: There's no reason for consumers to even worry about what the appraisal report contains so long as their lending institution is fine with the contents therein.
Fact: Only if home buyers check out a copy of their appraisal report can they ensure 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 appraisal report makes an invaluable record for future reference, comprised of helpful 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 property needs its price estimated in a lender-based sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: There's no reason to get an appraisal if you order a home inspection.
Fact: Appraisal reports are completely different than a home inspection report. An appraiser finds an opinion of value in the appraisal process and resulting appraisal. A home inspector determines the condition of the house and its main components and reports their findings.