Myth: The value that is assessed by the appraiser should be equivalent to the market value.
Reality: It is possible that Colorado, like most states, supports the suggestion that the assessed value is the same as the market value; however, this is not always true.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby homes are prime examples of why this occurs.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the appraised value of the home will vary.
Reality: There is no personal interest on the part of the appraiser in the outcome of the appraisal, therefore he will complete his work with impartiality and independence, despite of for whom the appraisal is ordered.
Myth: Any time market value is calculated, it should be the same as the replacement cost of the house.
Reality: Without any pressure from any different parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a particular house.
Replacement cost is the dollar amount required to rebuild a home in-kind.
Myth: There are certain methods that appraisers use to show the cost of a house, such as the price per square foot.
Reality: Appraisers complete an exhaustive analysis of all factors in consideration to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is doing well and the sales prices of homes are reported to be increasing by a certain percentage, the other properties in the area can be expected to appreciate based on that same percentage.
Reality: All appreciation of value is on an individual basis, determined by information on relevant considerations and the data of comparable houses.
This is true in robust economic times as well as bad.
Myth: You can commonly see what a house is worth simply by looking at the exterior.
Reality: There are a number of different factors that show the value of a house; these factors include location, condition, improvements, amenities, and market trends.
Obviously, none of these factors can be found just by examining the property from the exterior.
Myth: Because consumers fund appraisals when applying for loans to purchase or refinance their home, they own their appraisal.
Reality: Unless a lender releases its vestment in the appraisal report, it is legally owned by the lending company that purchased the appraisal.
Consumers have to be given a copy of the appraisal report through request due to the Equal Credit Opportunity Act.
Myth: Home buyers need not care about what is in their appraisal document so long as it exceeds the needs of their lending group.
Reality: It is very important for consumers to check over a copy of their report so that they can double-check the accuracy of the document, in case they need to question its accuracy. 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, since it contains an exorbitant amount 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 estimate of the value of a home during a sales transaction involving a lender.
Reality: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A house inspection serves the same purpose as an appraisal.
Reality: An appraisal report does not serve the same purpose as an inspection report.
An appraiser finds an opinion of value in the appraisal process and resulting report.
House inspectors will compose a report that will show the condition of the home and its major components and possible damage.
