Common myths about appraising
Legally, an appraiser needs to be state certified to create legitimate real estate appraisals for federally-backed transactions. The law gives you the right to get a copy of your finished appraisal from your lending agency after it has been produced. Contact our professional staff if you have any questions about the appraisal process.
Myth: Market value will be the same as the assessed value of the property.
Fact: It could be that Wisconsin, like most states, supports the idea that the assessed value is the same as the market value; however, this is sometimes the exception rather than the rule. Generally when interior remodeling has occurred and the assessor is unaware of the improvement or other houses in the neighborhood have not been reassessed for quite some time, it may vary wildly.
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 vested interest in the result of the appraisal report and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is found, it should be the same as the replacement cost of the property.
Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under pressure to buy or sell. If the home were reconstructed, the dollar amount required to do so would set the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are the methods appraisers use to ascertain the worth of a house.
Fact: Appraisers complete a full analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent worth of comparable houses.
Myth: As properties increase their worth by a certain percentage - in a robust economic state - the properties in proximity are expected to appreciate by the same amount.
Fact: Value increase of a certain property has to be determined on a case-by-case basis, factoring in information on comparable homes and other relevant considerations. It doesn't matter if the economy is doing well or declining.
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Myth: You can commonly find what a house is worth simply by looking at the exterior.
Fact: Home worth is determined by a multitude of factors, including - but not limited to - area, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information necessary.
Myth: Considering that the consumer is the person who provides the money to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Fact: The appraisal report is, in fact, legally owned by the lending agency - unless the lender "relinquishes its interest" in the appraisal report. However, home buyers have to be given a copy of the appraisal upon written request, because of the Equal Credit Opportunity Act.
Myth: Consumers need not worry about what is in their appraisal report so long as it meets the needs of their lending institution.
Fact: It is a very good idea for home buyers to read a copy of their appraisal report so that they can verify the accuracy of the document, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can double as a record for the future, containing an incredible amount of data - 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: There is no reason to order an appraisal unless you are trying to get an assessment of the value of a house during a sales transaction involving a lending company.
Fact: Based upon their qualifications and designations, appraisers can and may provide a variety of different services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection.
Fact: A home inspection report serves a completely different purpose than an appraisal report. The point of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the appraisal. The task of a home inspector is to assess the condition of the property and its major components, then write a report on these conclusions.