Common myths about appraising
It is mandated by legal agencies that an appraiser must be state-licensed to offer appraisals for federally-related property transactions in Kentucky. The law allows you to receive a copy of your completed appraisal report from your lending agency after it has been produced. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Assessed value should be equal to market value.
Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when homes in the vicinity have not been reassessed for an prolonged period.
Myth: The buyer or the seller will have an influence in the value of the property depending upon for whom the appraiser is working.
Fact: The appraiser has no personal interest in the result of the appraisal and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.
Myth: The replacement cost of the house is always is on par with the market value.
Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a particular property. The replacement cost is the dollar amount needed to rebuild a house in-kind.
Myth: Certain methods, like the price per square foot of the property, are the ways appraisers use to determine the value of a home.
Fact: There are many differing calculations that an appraiser will use to make a full analysis of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the cost of recently sold comparable homes.
Myth: In a robust economy - when the values of homes in a given area are found to be increasing by a certain percentage - the worth of individual houses in the proximity can be expected to rise by that same percentage.
Fact: Worth appreciation of a certain house is always determined on a case-by-case basis, factoring in data on comparable homes and other relevant elements. It doesn't matter if the economy is doing well or declining.
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Myth: The home's exterior is determinate of the actual worth of the home; there is no need to do an interior appraisal.
Fact: Property value is determined by a number of variables, including - but not limited to - area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the data needed.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their house, they legally own their appraisal.
Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the report. However, consumers must be given a copy 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 so long as it satisfies the requirements of their lending company.
Fact: A consumer should definitely look through their appraisal; there may be some questions or some concerns about the accuracy of the appraisal report that need to be addressed. 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, filled with helpful and often-revealing data - including 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 area.
Myth: Appraisals are ordered only to assess home values in house sales involving mortgage-lending transactions.
Fact: Based upon their qualifications and designations, appraisers can and will perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is the same as a home inspection report.
Fact: A home inspection report has a completely different purpose than an appraisal report. The job of the appraiser is to conclude an opinion of value in the appraisal process and through creating the report. House inspectors will compose a report that will show the condition of the property and its major components and possible damage.