Common myths about appraising

By law, an appraiser is required to be state-licensed to produce appraisals for federally-backed purchases. You also have the right to request a copy of the completed appraisal from your lender. Contact our professional staff if you have any questions about the appraisal process.

Myth: Market value needs to be equivocal to the assessed value of the property.

Fact: It could be that Colorado, like most states, validates the idea that the assessed value equates to the market value; however, this is not often the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby houses are perfect examples of why there might be a differential in price.

Myth: Depending on whether the appraisal is provided for the buyer or the seller, the opinion of value of the property will vary.

Fact: There is no personal interest on the part of the appraiser in the result of the appraisal report, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is created.

Myth: Market value will equate to replacement cost.

Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a property without being under duress from any outside group to buy or sell. Replacement cost is the dollar amount required to rebuild a house in-kind.

Myth: There are specific ways that appraisers use to show the cost of a property, like the price per square foot.

Fact: Appraisers complete an exhaustive analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent costs of comparable houses.

Myth: When the economy is strong and the cost of houses are reported to be increasing by a certain percentage, the other houses in the proximity can be expected to appreciate based on that same percentage.

Fact: All increase of worth is on a one-on-one basis, determined by data on relevant conditions and the data of comparable houses. It doesn't matter if the economy is on the rise or declining.

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Myth: You can commonly find what a home is worth simply by looking at the outside.

Fact: To conclude an accurate value beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. An external inspection definitely can't provide all of the data required.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their home, they legally own their appraisal report.

Fact: Legally, the appraisal is owned by the lender unless the lender relinquishes their interest in the appraisal. Home buyers must be given a version of the report upon written request as per the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the requirements of their lending agency.

Fact: A home buyer should definitely inspect their document; there may be some questions or some concerns about the accuracy of the inspection that should be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an report that will probably be useful to the consumer 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 order an appraisal is if a property needs its cost estimated in a lender sales transaction.

Fact: Appraisers can have many varied qualifications and designations which allow them to provide a series of different services including - but not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: You don't need to get an appraisal if you order a home inspection.

Fact: An appraisal report does not serve the same purpose as an inspection. The reason behind an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal report. A home inspector assesses the condition of the property and its main components and reports their findings.

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