Myth: Market value needs to be similar to the assessed value of the property.
Reality: It could be that MD, like most states, supports the idea that the assessed value equates to the market value; however, this is not often the case.
Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby houses are excellent examples of why there might be a differential in price.
Myth: The buyer or the seller may have leverage in the value of the property depending upon for whom the appraiser is working.
Reality: The appraiser has no vested interest in the result of the appraisal and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement cost of the property is always is on par with the market value.
Reality: The way market value is derived is based on what a buyer would likely pay a willing seller for a home without being under duress from any external group to buy or sell.
Replacement cost is the dollar amount needed to rebuild a home in-kind.
Myth: Certain formulae, like the price per square foot, are what appraisers use to ascertain the value of a house.
Reality: There are many different processes that an appraiser will use to make an in-depth investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the sales price of recently sold comparable properties.
Myth: In a powerful economy - when the prices of properties in a given area are found to be appreciating by a certain percentage - the prices of individual properties in the proximity can be expected to appreciate by that same percentage.
Reality: All increase of value is on an individual basis, found by data on relevant conditions and the data of comparable homes.
It makes no difference whether the economy is good or on the decline.
Myth: You can generally find what a home is worth simply by looking at the outside.
Reality: There are a multitude of different factors that show the value of a house; these factors include location, condition, improvements, amenities, and market trends.
Obviously, none of these things can be derived just by inspecting the home from the outside.
Myth: Since you're the one funding for the appraisal report when applying for your loan to buy or refinance your house, you own the ordered appraisal report.
Reality: The report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the report.
However, consumers have to be provided with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: There's no point for home buyers to even worry about what the appraisal contains so long as their lending agency is satisfied.
Reality: A consumer should definitely read through their report; there may be some questions or some worries about the accuracy of the analysis that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is an incredible amount of data stored in a report that could be useful to the home buyer in the future, such as 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: Appraisals are ordered only to estimate real estate property values in house sales involving mortgage-lending deals.
Reality: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a variety of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: Appraisal reports are definitely not the same as a home inspection report.
The point of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the completion of the report.
A home inspector determines the condition of the home and its major components and reports their findings.
