Appraisal myths & facts
It is required by law that an appraiser needs to be state-licensed to produce appraisals for federally-related real estate transactions in Pennsylvania. The law allows you to get a copy of your completed appraisal report from your lender after it has been provided. Contact Nordquist Appraisal LLC if you have any concerns about the appraisal procedure.
Myth: Market value should be similar to the assessed value of the property.
Fact: While most states uphold the suggestion that assessed value is the same as estimated market value, this often is not the case. Examples include when interior reconstruction has occurred and the assessor does not know about the improvements, or when houses in the area have not been reassessed for an extended time.
Myth: The appraised value of a house will differ depending upon whether the appraisal is produced for the buyer or the seller.
Fact: The appraiser has no vested interest in the result of the appraisal report and should complete his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: The replacement value of the property should be is on par with the market value.
Fact: Without any influence from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific home. Replacement value is the dollar amount necessary to rebuild a property in-kind.
Myth: There are specific ways that appraisers use to determine the cost of a property, such as the price per square foot.
Fact: An appraisal is an assertion of data based on the home's size, location, proximity to certain facilities, the condition of the property and the cost of recent comparable sales. You can depend on Nordquist Appraisal LLC's appraisers to be professional in assessing this data.
Myth: When the economy is robust and the sales prices of houses are found to be rising by a certain percentage, the other homes in the vicinity can be expected to increase based on that same percentage.
Fact: Price appreciation of a specific house has to be concluded on a case-by-case basis, factoring in information on comparable properties and other relevant specifications within the house itself. It makes no difference whether the economy is strong or bad.
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Myth: Just examining what the house looks like on its exterior gives an idea of its cost.
Fact: To conclude an accurate worth beyond all doubt, an appraiser must examine the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. There's no real way to get all of this data from simply looking at the home from the outside.
Myth: Since the consumer is the party who provides the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.
Fact: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the report. Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the document must be provided with it by their lending company.
Myth: There's no reason for home buyers to even concern themselves with what the appraisal contains so long as their lending agency is satisfied.
Fact: A consumer should definitely read through their appraisal; there might be some questions or some worries with the accuracy of the appraisal report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, comprised of helpful 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 proximity.
Myth: Appraisers are hired only to assess house values in home 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 definitely not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.
Myth: An appraisal is no different than a home inspection report.
Fact: An appraisal report does not fulfill the same purpose as an inspection. The purpose of an appraisal is to conclude upon an opinion of fair market value during the appraisal process and the production of the appraisal report. The purpose of a home inspector is to determine the condition of the home and its main components, then compose a report on these inspection.