Common myths about appraising
It is required by legal agencies that a real estate appraiser needs to be state-licensed to create appraisals for federally-supported home purchases in New Mexico. The law allows you to acquire a copy of your finished report from your lender after it has been produced. Contact us if you have any concerns about the appraisal process.
Myth: Assessed value will always equate to market value.
Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor has not investigated and a dearth of reassessment on nearby homes are excellent examples of why there might be a differential in price.
Myth: Depending on if the appraisal is provided for the buyer or the seller, the opinion of value of the property will vary.
Fact: The appraiser has no personal interest in the outcome of the appraisal and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Market value will approximate replacement cost.
Fact: Without any pressure from any outside parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific house. The dollar amount needed to reconstruct a home is what constitutes the replacement cost.
Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to come to the worth of a property.
Fact: There are many different calculations that an appraiser will use to make a full analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable properties.
Myth: As houses increase their worth by a certain percentage - in a robust economy - the properties within the same neighborhood are figured to appreciate by the same amount.
Fact: Any price at which an appraiser concludes concerning a particular property is always individualized, based on certain factors found from the information of comparable houses and other considerations within the property itself. It makes no difference if the economy is robust or bad.
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Myth: Just looking at what the house looks like on the outside gives an excellent idea of its worth.
Fact: Home value is determined by a multitude of factors, including area, condition, improvements, amenities, and market trends. Obviously, none of these things can be found simply by examining the property from the exterior.
Myth: Since the consumer is the person who puts up the funding to pay for the appraisal report 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 lender - unless the lender "releases its interest" in the document. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the appraisal report must be given it by their lender.
Myth: Home buyers need not worry about what is in their appraisal report so long as it satisfies the needs of their lending agency.
Fact: Only if home buyers read a copy of their 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 appraisal makes an excellent record for future reference, filled with 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 vicinity.
Myth: The only reason someone would order an appraisal is if a house needs its worth estimated in a lender-based sales transaction.
Fact: Appraisers can have many different qualifications and designations which allow them to provide a variety 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: You shouldn't need to get an appraisal if you order a home inspection.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The appraiser forms an opinion of value in the appraisal process and resulting report. House inspectors will create a report that will determine the condition of the house and its major components and possible damage.