Appraisal myths & facts

It is enforced by law that an appraiser must be state-licensed to perform appraisal reports for federally-related real estate sales in Massachusetts. You have the ability to receive a copy of the finished appraisal report from your lender. Contact South Shore Realty Advisors, Inc if you have any questions about the appraisal process.

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

Fact: It could be that Massachusetts, like most states, validates the idea that the assessed value is the same as the market value; however, this is not often the case. At times when interior remodeling has been done and the assessor is not aware of the improvement or other houses in the Marshfield have not been reassessed for a good length of time, it may vary wildly.

Myth: The buyer or the seller will have some pull in the value of the house depending upon for whom the appraiser is working.

Fact: There is no real interest on the part of the appraiser in the result of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is created.

Myth: Market value will equal replacement cost.

Fact: The way market value is arrived at is based on what a home buyer would likely pay a willing seller for a property without being under duress from any outside party to purchase or sell. If the property were reconstructed, the dollar amount necessary to do so would make up the replacement cost.

Myth: There are certain methods that appraisers use to determine the cost of a house, like the price per square foot.

Fact: Appraisers complete a full analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent costs of comparable properties.

Myth: When the economy is on the rise and the value of houses are reported to be increasing by a certain percentage, the other properties in the proximity can be expected to appreciate based on that same percentage.

Fact: Any value at which an appraiser arrives in regards to a specific property is always personalized, based on certain factors derived from the data of comparable houses and other considerations within the house itself. This is true in excellent economic times as well as poor.

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Myth: Just seeing what the house looks like on the outside gives a good idea of its cost.

Fact: There are a multitude of different variables that determine property value; these factors include area, condition, improvements, amenities, and market trends. Obviously, none of these variables can be derived simply by looking at the house from the exterior.

Myth: Since the consumer is the party who puts up the funding to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal is theirs.

Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the report. Due the Equal Credit Opportunity Act, any consumer requesting a copy of the report must be given one by their lending company.

Myth: There's no point for consumers to even care about what the appraisal contains so long as their lending company is fine with the contents therein.

Fact: Only if home buyers look over a copy of their appraisal 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 a near perfect record for future reference, filled with useful and often-revealing data - 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: Appraisers are hired only to assess house values in property sales involving mortgage-lending deals.

Fact: Appraisers can have many different qualifications and designations which allow them to provide a lot 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 property inspection serves the same purpose as an appraisal.

Fact: Appraisal reports are nothing like a home inspection. The appraiser forms an opinion of value in the appraisal process and resulting report. A home inspector determines the condition of the building and its major components and reports these findings.