Appraisal myths & facts

It is enforced by law that an appraiser needs to be state-licensed to produce appraisal reports for federally-supported home transactions in Illinois. You also have the right to demand a copy of the finished report from your lender. Contact Vista Real Estate Services, Inc. if you have any questions about the appraisal procedure.

Myth: Market value has to be similar to the assessed value of the property.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. At times when interior remodeling has occurred and the assessor is unaware of the improvement or properties in the neighborhood have not been reassessed for quite a while, it may vary wildly.

Myth: Depending on whether the appraisal is written for the buyer or the seller, the appraised value of the house will vary.

Fact: The opinion of value of the property does not affect the payment of the appraiser; as such, the appraiser has no pressured interest in the value of the house. Obviously, he will conduct job with impartiality and independence regardless for whom the appraisal is produced.

Myth: Market value will equate to replacement cost.

Fact: Market value is found by what a willing buyer would be interested in paying a willing seller for a certain home, with neither being under pressure to buy or sell. The dollar amount needed to rebuild a house is what forms the replacement cost.

Myth: Certain formulae, such as the price per square foot of the property, are the methods appraisers use to ascertain the value of a home.

Fact: There are many different formulae that an appraiser will use to make a full investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the value of recently sold comparable houses.

Myth: As properties increase their worth by a certain percentage - in a strong economy - the homes around the appreciating properties are figured to increase by the same amount.

Fact: Value increase of a certain house has to be concluded on a case-by-case basis, factoring in data on comparable houses and other relevant elements. This is true in strong economic times as well as bad.

Myth: The house's exterior is determinate of the actual value of the house; it is unnecessary to do an interior appraisal.

Fact: There are a number of different factors that determine property value; these factors include area, condition, improvements, amenities, and market trends. As you can see, none of these factors can be derived just by inspecting the property from the outside.

Myth: Considering that the consumer is the person who puts up the funding to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: Legally, the appraisal is owned by the lending agency unless the lender releases their interest in the document. Consumers have to be given a copy of the appraisal report upon written request because of the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in their appraisal so long as it satisfies the needs of their lending company.

Fact: A home buyer should definitely inspect their report; there will probably be some questions or some worries with the accuracy of the inspection that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a valuable record for future reference, comprised of helpful and often-revealing information - 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.