Appraisal myths debunked
It is mandated by law that an appraiser needs to be state-licensed to write appraisal reports for federally-related property transactions in Colorado. The law gives you the right to acquire a copy of your finished appraisal report from your lender after it has been produced. Contact Appraise Colorado Inc if you have any concerns about the appraisal procedure.
Myth: Assessed value should always be equal to market value.
Fact: It is probable that Colorado, like most states, supports the common myth that the assessed value equates to the market value; however, this certainly varies based on state-to-state. Examples include when interior remodeling has occurred and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: Depending on if the appraisal is written for the buyer or the seller, the opinion of value of the property will vary.
Fact: The cost of the property does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the cost of the house. Obviously, he will conduct services with impartiality and independence regardless for whom the appraisal is conducted.
Myth: Market value should equal replacement cost.
Fact: Without any influence from any external parties to buy or sell, market value is what a willing buyer would pay an interested seller for a particular home. If the home were reconstructed, the dollar amount necessary to do so would make up the replacement cost.
Myth: Specific formulae, such as the price per square foot, are what appraisers use to ascertain the worth of a property.
Fact: There are many numerous processes that an appraiser will use to make a full investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable homes.
Myth: As houses increase their worth by a certain percentage - in a strong economy - the properties nearby are expected to appreciate by the same amount.
Fact: Value increase of a certain property is always determined on an individualized basis, factoring in data on comparable homes and other relevant elements. It doesn't matter if the economy is doing well or declining.
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Myth: You can generally find what a property is worth simply by looking at the exterior.
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 current market trends. There's no real way to get all of this information from simply looking at the house from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their house, they own their appraisal.
Fact: Legally, the report is owned by the lending agency unless the lender releases their interest in the report. Due the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given one by their lending company.
Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the requirements of their lender.
Fact: A home buyer should definitely read through their appraisal report; there will probably be some questions or some concerns about the accuracy of the report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of information contained in an appraisal 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 proximity.
Myth: Appraisers are hired only to assess home values in house sales involving mortgage-lending deals.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a multitude 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 order a home inspection.
Fact: An appraisal does not fulfill the same purpose as an inspection. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. House inspectors will write a report that will determine the condition of the home and its major components and possible damage.