Common myths about appraising

It is mandated by the government that a real estate appraiser needs to be state-licensed to create appraisals for federally-related home transactions in Alabama. Also by law, you have the right to demand a copy of the completed appraisal report from your lender. Contact us if you have any concerns about the appraisal process.

Myth: The value that is ascertained by the appraiser must be the same as the market value.

Fact: While most states back the concept that assessed value equates estimated market value, this often is not the case. Sometimes when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the Tuscaloosa have not been reassessed for quite some time, it may vary wildly.

Myth: Depending on if the appraisal is written for the buyer or the seller, the value of the house will vary.

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

Myth: Market value will equal replacement cost.

Fact: The way market value is arrived at is based on what a home buyer would be willing to pay a willing seller for a home without being under pressure from any outside party to buy or sell. Replacement value is the dollar amount needed to reconstruct a property in-kind.

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

Fact: Appraisers make a full analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent sale prices of comparable houses.

Myth: In a robust economy - when the values of homes in a given area are found to be appreciating by a particular percentage - the costs of individual properties in the vicinity can be expected to increase by that same percentage.

Fact: All increase of worth is on an individual basis, concluded by data on relevant considerations and the data of comparable properties. This is true in good economic times as well as bad.

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

Fact: Property worth is determined by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the information necessary.

Myth: Because the consumer is the one who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Legally, the report is owned by the lending agency unless the lender releases their interest in the document. Home buyers have to be given a version of the report upon written request due to the Equal Credit Opportunity Act.

Myth: There's no point for home buyers to even worry about what the appraisal contains so long as their lending agency is fine with the contents therein.

Fact: Only if consumers look over a copy of their appraisal report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes an excellent record for future reference, filled with helpful and often-revealing information - including, but 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 area.

Myth: Appraisals are ordered only to estimate real estate property values in home sales involving mortgage-lending transactions.

Fact: Based upon their qualifications and designations, appraisers can and may perform a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: There's no need to get an appraisal if you get a home inspection.

Fact: A home inspection report has a completely different purpose than an appraisal report. The reason behind an appraisal is to arrive at an opinion of fair market value during the appraisal process and the production of the appraisal report. House inspectors will write a report that will explain the condition of the property and its major components and possible damage.