Common myths about appraising

It is mandated by law that an appraiser is required to be state-licensed to perform appraisals for federally-supported real estate sales in Colorado. The law entitles you to receive a copy of your completed report from your lender after it has been provided. Contact us if you have any questions about the appraisal process.

Myth: Assessed value should equate to market value.

Fact: While most states back the concept that assessed value is equal to estimated market value, this usually is not the case. Examples include when interior remodeling has happened and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an prolonged period of time.

Myth: The value of a house will differ depending upon if the appraisal is ordered for the buyer or the seller.

Fact: The price of the property does not affect the salary of the appraiser; as a result, the appraiser has no vested interest in the worth of the house. What this means is he will complete his business with impartiality and independence regardless for whom the appraisal is produced.

Myth: The replacement cost of the property will be is on par with the market value.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain home, with neither being under undue influence to buy or sell. The dollar amount required to reconstruct a house is what shows the replacement cost.

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

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

Myth: In a powerful economy - when the values of homes in a given neighborhood are reported to be rising by a certain percentage - the costs of individual properties in the area can be expected to increase by that same percentage.

Fact: Any price at which an appraiser arrives in regards to a particular home is always personalized, based on certain factors derived from the information of comparable houses and other specifications within the home itself. It makes no difference whether the economy is strong or terrible.

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Myth: Just examining what the home looks like on the outside gives a good idea of its worth.

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

Myth: Since you're the one coughing up the cash for the appraisal when applying for your loan to buy or refinance real estate, you own the ordered appraisal report.

Fact: Legally, the appraisal is owned by the lending agency unless the lender relinquishes their interest in the report. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be provided with it by their lending company.

Myth: There's no point for home buyers to even worry about what the appraisal contains so long as their lending agency is satisfied.

Fact: It is almost imperative for consumers to check over a copy of their appraisal so that they can verify the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. An report can serve as a record for the future, containing a great deal of information - including, but 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 area.

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

Fact: Appraisers can have many varied qualifications and designations which allow them to perform 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: A house inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are nothing like a home inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting report. The job of a home inspector is to find the condition of the home and its main components, then compose a report on these findings.