Common myths about appraising
It is enforced by the government that an appraiser must be state-licensed to perform appraisals for federally-related real estate sales in Michigan. You are also entitled by law to request a copy of the finished appraisal from your lender. Contact our professional staff if you have any concerns about the appraisal procedure.
Myth: The value that is assessed by the appraiser must be exactly the same as the market value.
Fact: It is probable that Michigan, like most states, supports the idea that the assessed value equates to the market value; however, this is not often the case. Often when interior remodeling has occurred and the assessor is unaware of the improvement or properties in the Oakland County have not been reassessed for quite some time, it may vary wildly.
Myth: The appraised value of a house will differ depending upon if the appraisal is provided for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should approximate replacement cost.
Fact: Without any suggestion from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the property were reconstructed, the dollar amount needed to do so would form the replacement cost.
Myth: Appraisers use a calculation, such as a certain price per square foot, to arrive at the cost of a property.
Fact: There are many different formulae that an appraiser will use to make a detailed analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to undesirable facilities and the cost of recently sold comparable properties.
Myth: As properties appreciate by a specific percentage - in a strong economic state - the properties in proximity are figured to increase by the same amount.
Fact: All increase of worth is on an individual basis, concluded by information on relevant considerations and the data of comparable homes. This is true in fair economic times as well as bad.
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Myth: You can usually see what a house is worth simply by looking at the exterior.
Fact: There are a multitude of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the information necessary.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their house, they own their appraisal report.
Fact: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the document. Under the Equal Credit Opportunity Act, any home buyer requesting a copy of the appraisal report must be provided with it by their lender.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the needs of their lending agency.
Fact: A home buyer should definitely look through their report; there might be some questions or some worries with the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of information contained in an appraisal that could 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 region.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a home during a sales transaction involving a lending institution.
Fact: Appraisers can have many varied qualifications and designations which allow them to provide 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 is the same as a home inspection.
Fact: A home inspection report has a completely different purpose than an appraisal. An appraiser finds an opinion of value in the appraisal process and resulting report. The purpose of a home inspector is to assess the condition of the home and its major components, then create a report on these findings.