Common myths about appraising
It is required by law that an appraiser is required to be state-licensed to produce appraisal reports for federally-supported property purchases in Wisconsin. Also by law, you are allowed to demand a copy of the completed appraisal report from your lending agency. Contact A & B Tax Service if you have any questions about the appraisal process.
Myth: Assessed value generally will equate to market value.
Fact: It is probable that Wisconsin, like most states, supports the idea that the assessed value is the same as the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor is unaware of and a dearth of reassessment on nearby properties are prime examples of why there might be a differential in price.
Myth: The buyer or the seller will have impact in the value of the house depending upon for whom the appraiser is working.
Fact: There is no personal interest on the part of the appraiser in the result of the appraisal, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: Without any influence from any outside parties to buy or sell, market value is what a willing buyer would pay a willing seller for a particular house. The dollar amount needed to reconstruct a house is what forms the replacement cost.
Myth: Specific formulae, like the price per square foot of the property, are what appraisers use to ascertain the price of a property.
Fact: Appraisers make an exhaustive analysis of all factors pertaining to the cost of a house, including its location, condition, size, proximity to facilities and recent opinion of value of comparable houses.
Myth: As houses increase their worth by a certain percentage - in a strong economic state - the homes in proximity are figured to increase by the same amount.
Fact: All increase of price is on a case-by-case basis, determined by data on relevant elements and the data of comparable homes. It makes no difference whether the economy is strong or bad.
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Myth: Just seeing what the home looks like on its exterior gives an idea of its value.
Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from simply examining the house from the outside.
Myth: Since you're the one coughing up the cash for the appraisal when applying for the loan to buy or refinance real estate, you own the provided appraisal.
Fact: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, home buyers must be supplied with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: Home buyers need not worry about what is in their appraisal so long as it exceeds the necessities of their lending institution.
Fact: Only if home buyers read a copy of their appraisal report can they verify its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information stored in an report that could be useful to the consumer in the future, such as 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 building values in property sales involving mortgage-lending transactions.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot 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: A home inspection serves the same purpose as an appraisal.
Fact: An appraisal does not serve the same purpose as an inspection. The task of the appraiser is to conclude an opinion of value in the appraisal process and through writing the report. House inspectors will compose a report that will express the condition of the house and its major components and possible damage.