Appraisal myths & facts
Legally, a real estate appraiser needs to be state certified to write legitimate real estate appraisals for federally-backed transactions. The law allows you to get a copy of your completed appraisal from your lending agency after it has been produced. Contact Northern Arizona Appraisal, Inc. if you have any questions about the appraisal procedure.
Myth: Assessed value generally will be the same as to market value.
Fact: It is probable that Arizona, like most states, supports the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby houses are exact examples of why the price can vary.
Myth: The buyer or the seller sometimes may have impact in the cost of the house depending upon for whom the appraiser is working.
Fact: The appraiser has no personal interest in the result of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value should approximate replacement cost.
Fact: Market value is found by what a willing buyer would likely pay a willing seller for a specific home, with neither being under duress to buy or sell. If the property were rebuilt, the dollar amount necessary to do so would be the replacement cost.
Myth: Appraisers use a calculation, like a certain price per square foot, to figure out the value of a home.
Fact: An appraisal report is a collection of information based on the home's size, location, proximity to certain facilities, the condition of the home and the value of recent comparable sales. You can rely on Northern Arizona Appraisal, Inc.'s appraisers to be professional in assessing this data.
Myth: In a powerful economy - when the values of houses in a given county are found to be increasing by a certain percentage - the values of individual homes in the area can be expected to appreciate by that same percentage.
Fact: Any value at which an appraiser concludes concerning a particular home is always personalized, based on certain factors derived from the information of comparable houses and other considerations within the home itself. It doesn't matter if the economy is doing well or declining.
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Myth: Just looking at what the house looks like on the outside gives a good idea of its value.
Fact: To determine an accurate value beyond all doubt, an appraiser must assess the property on a variety of factors based on area, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the data needed.
Myth: Considering that the consumer is the person who provides the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: The appraisal is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the appraisal report. Consumers have to be supplied with a version of the appraisal report upon written request due to 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: It is very important for home buyers to peruse a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an invaluable record for future reference, containing 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 proximity.
Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the cost of a property during a sales transaction involving a lending institution.
Fact: Based upon their qualifications and designations, appraisers can and do perform a lot 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 serves a completely different purpose than an appraisal report. The purpose of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal report. House inspectors will create a report that will explain the condition of the home and its major components and possible damage.