Myth: Market value will be the same as the assessed value of the property.
Reality: It could be that Alabama, like most states, validates the idea that the assessed value is no different from the market value; however, this is sometimes the exception rather than the rule.
Examples include when interior reconstruction has occurred and the assessor is unaware of the improvements, or when houses in the vicinity have not been reassessed for an prolonged period of time.
Myth: Depending on whether the appraisal is produced for the buyer or the seller, the appraised value of the house will vary.
Reality: There is no real interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, despite of for whom the appraisal is ordered.
Myth: Market value will equal replacement cost.
Reality: Without any pressure from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific home.
Replacement value is the dollar amount required to reconstruct a house in-kind.
Myth: Appraisers use a calculation, such as a certain price per square foot, to figure out the value of a house.
Reality: There are many varied processes that an appraiser will use to make a detailed investigation of every factor pertaining to the property, such as the size, location, condition, how close it is to undesirable facilities and the sales prices of recently sold comparable properties.
Myth: In a powerful economy - when the prices of properties in a given neighborhood are found to be rising by a certain percentage - the prices of individual homes in the area can be expected to appreciate by that same percentage.
Reality: All appreciation of value is on a one-on-one basis, found by information on relevant conditions and the data of comparable homes.
It makes no difference if the economy is strong or terrible.
Myth: The home's exterior is determinate of the actual value of the property; there is no need to do an interior appraisal.
Reality: There are a number of different variables that determine the value of a house; these factors include area, condition, improvements, amenities, and market trends.
There's no possible way to get all of this data from just viewing the house from the exterior.
Myth: Since you're the one funding for the appraisal when applying for the loan to buy or refinance your home, you own the ordered appraisal.
Reality: Legally, the appraisal report is owned by the lender unless the lender relinquishes their interest in the appraisal.
Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be provided with one by their lending agency.
Myth: It doesn't concern consumers what's in the appraisal so long as it satisfies the requirements of their lender.
Reality: It is almost imperative for consumers to peruse a copy of their report so that they can double-check the accuracy of the report, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can serve as a record for the future, as it contains an incredible 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: There is no reason to hire an appraiser unless you are trying to get an estimate of the value of a property during a sales transaction involving a lender.
Reality: 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: You don't have to get an appraisal if you have had a home inspection.
Reality: A home inspection serves a completely different purpose than an appraisal report.
The purpose of the appraiser is to conclude an opinion of value in the appraisal process and through producing the report.
The task of a home inspector is to determine the condition of the home and its major components, then create a report on these conclusions.
