I recently reported on a class I attended at the local Real Estate Board on the appraisal aspects of real estate. It was called aMaking Sense of Home Values in this Crazy Marketa. The speaker was an appraiser from DS Murphy, one of the largest appraisal companies in the area.
I had a question about the effect of a land fill on new homes, e.g. building near an existing landfill. At the end of the class I asked where I might do some further research on the subject and the instructor pointed me to a web site fir the appraisal Industry. It is called the Apprasial Institute and they can be found at http://info.appraisalinstitute.org. I signed up for their newsletter and though Iad share an article about appraisal myths.
When consumers proceed on the purchase or sale of a home, or to refinance, securing an appraisal is a key step in the process. However, some misconceptions exist relative to appraisals and appraisers, and the Appraisal Institute encourages individuals to understand the following myths and realities.
Myth: Assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximates estimated market value, this often is not the case.
Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality.
Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.
Myth: In a robust economy a when the sales prices of homes in a given area are reported to be rising by a particular percentage a the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations.
Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities and market trends.
Myth: Because consumers pay for appraisals, they own their appraisal.
Reality: The appraisal is legally owned by the lender a unless the lender areleases its interesta in the document. However, effective Jan. 21, 2013, a new requirement of the Dodd-Frank Act will mandate that creditors furnish a free copy of all appraisals and valuations on applications for loans for first liens on dwellings promptly upon completion, but no later than three days prior to closing.
Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only by reading a copy of their appraisal can consumers double-check its accuracy and question the result. Also, it makes a valuable record for future reference.
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