Common myths about appraising

It is mandated by the government that an appraiser must be state-licensed to create appraisal reports for federally-supported real estate transactions in Colorado. Also by law, you are entitled to demand a copy of the finished appraisal report from your lending agency. Contact us if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser will be the same as the market value.

Fact: It is probable that Colorado, like most states, supports the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged time.

Myth: The opinion of value of a property will be different depending upon if the appraisal is produced for the buyer or the seller.

Fact: There is no personal interest on the part of the appraiser in the result of the analysis, therefore he will conduct his work with impartiality and independence, despite for whom the appraisal is written.

Myth: The replacement value of the property is always is on par with the market value.

Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under duress to buy or sell. If the property were reconstructed, the dollar amount needed to do so would make up the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the worth of a property.

Fact: An appraisal is an assertion of data based on the home's size, location, proximity to undesirable facilities, the condition of the house and the value of recent comparable sales. You can rely on Appraise Colorado Inc's staff to be honest in assessing this data.

Myth: As homes appreciate by a certain percentage - in a robust economic state - the homes nearby are expected to increase by the same amount.

Fact: Worth appreciation of a certain home must be determined on a case-by-case basis, factoring in data on comparable houses and other relevant elements. It doesn't matter if the economy is on the rise or declining.

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Myth: Just examining what the home looks like on its exterior gives an idea of its worth.

Fact: To determine an accurate value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be found simply by looking at the house from the outside.

Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance real estate, they legally own their appraisal.

Fact: Legally, the report is owned by the lender unless the lender relinquishes their interest in the appraisal. However, home buyers have to be given a copy of the appraisal report upon written request, under the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the report so long as it satisfies the needs of their lending company.

Fact: A consumer should definitely read through their document; there will probably be some questions or some worries with the accuracy of the inspection that should be addressed. 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 information - including, but certainly 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 proximity.

Myth: There is no reason to order an appraisal unless you are trying to get an estimate of the value of a property during a sales transaction involving a lending company.

Fact: Hiring an appraiser can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal report is the same as a home inspection report.

Fact: A home inspection report has a completely different purpose than an appraisal report. An appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. The purpose of a home inspector is to determine the condition of the home and its major components, then produce a report on these inspection.