Myth: Market value needs to be equivocal to the assessed value of the property.
Reality: It is probable that Maryland, like most states, validates the idea that the assessed value is no different from the market value; however, this certainly varies based on state-to-state. Interior reconstruction that the assessor is not aware of and a lack of reassessment on nearby homes are prime examples of why this occurs.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the value of the home will vary.
Reality: The appraiser has no personal interest in the outcome of the report and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Any time market value is determined, it should be the same as the replacement cost of the home.
Reality: Market value is derived from what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under pressure to buy or sell. If the home were reconstructed, the dollar amount necessary to do so would make up the replacement cost.
Myth: Appraisers use a calculation, like a specific price per square foot, to conclude the value of a home.
Reality: There are many numerous formulae that an appraiser will use to make an in-depth investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the values of recently sold comparable houses.
Myth: When the economy is strong and the sales prices of homes are reported to be increasing by a certain percentage, the other houses in the vicinity can be expected to increase based on that same percentage.
Reality: An increase in value of a specific house is always determined on a case-by-case basis, factoring in data on comparable houses and other relevant considerations. This is true in excellent economic times as well as bad.
Myth: Just examining what the home looks like on the outside gives a good idea of its value.
Reality: There are a number of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found just by inspecting the property from the outside.
Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance real estate, they legally own their appraisal.
Reality: Legally, the report is owned by the lending agency unless the lender releases their interest in the appraisal. Because of the Equal Credit Opportunity Act, any home buyer asking for a copy of the report must be given it by their lending agency.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it meets the requirements of their lending agency.
Reality: It is a very good idea for home buyers to peruse a copy of their report so that they can double-check the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, comprised of useful and often-revealing information - including 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 building values in home sales involving mortgage-lending transactions.
Reality: Appraisers can have many different qualifications and designations which allow them to provide a multitude 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: There's no need to get an appraisal if you have had a home inspection.
Reality: An appraisal report does not serve the same purpose as an inspection report. The job of the appraiser is to find an opinion of value in the appraisal process and through creating the report. The job of a home inspector is to determine the condition of the property and its main components, then compose a report on their inspection.
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