Appraisal myths & facts
It is required by the government that a real estate appraiser must be state-licensed to write appraisals for federally-supported home sales in Michigan. You also have the right to acquire a copy of the finished appraisal from your lender. Contact our professional staff if you have any questions about the appraisal procedure.
Myth: The value that is ascertained by the appraiser should be the same as the market value.
Fact: While most states support the idea that assessed value is the same as estimated market value, this commonly is not the case. Usually when interior remodeling has occurred and the assessor is unaware of the improvement or properties in the area have not been reassessed for quite some time, it may vary wildly.
Myth: The value of a home will change depending upon if the appraisal is ordered for the buyer or the seller.
Fact: The appraiser has no personal interest in the outcome of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement cost of the house will be is on par with the market value.
Fact: Without any pressure from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific property. If the house were rebuilt, the dollar amount required to do so would be the replacement cost.
Myth: There are specific ways that real estate appraisers use to determine the opinion of value of a house, like the price per square foot.
Fact: Appraisers make a detailed analysis of all factors pertaining to the price of a home, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: As homes increase their worth by a specific percentage - in a strong economic state - the properties around the appreciating properties are expected to increase by the same amount.
Fact: All appreciation of worth is on a case-by-case basis, found by data on relevant considerations and the data of comparable houses. It makes no difference if the economy is good or on the decline.
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Myth: You can often see what a property is worth simply by looking at the exterior.
Fact: To find an accurate value beyond all doubt, an appraiser must assess the house on a variety of factors based on location, condition, improvements, amenities, and market trends. There's no possible way to get all of this data from just inspecting the house from the outside.
Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their home, they legally own their appraisal.
Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending agency that ordered the appraisal. However, home buyers have to be supplied with a copy of the appraisal report upon written request, through the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their document so long as it satisfies the requirements of their lending group.
Fact: Only if home buyers read a copy of their report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double 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 proximity.
Myth: Appraisals are ordered only to estimate home values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many different qualifications and designations which allow them to perform a series of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal report is the same as a home inspection.
Fact: Appraisal reports are nothing like a home inspection. The point of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal report. A home inspector assesses the condition of the house and its main components and reports these findings.