Myth: The value that is assigned by the tax assessor will be equivalent to the market value.
Reality: The relationship between assessed (tax) value and a home's true Market Value varies considerably based on several factors: the accuracy of the asssessor's property data, recent improvements and overall condition of the home, Assessor policies regarding declining value trends, and how long it has been since a home was reassessed. The truth is that at least half of all homes in central Ohio are currently assessed for more than their rational Market Value.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the opinion of value of the house will vary.
Reality: The Market Value of a home is not affected by the identity of the party ordering &/or paying for the appraisal. A professional appraiser has no preconceived notion of the value of the property. What this means is he will render his opinion with impartiality and objectivity regardless of for whom the appraisal is provided.
Myth: The replacement cost of the property will be on par with the market value.
Reality: Replacement Cost rarely equal Market Value. In theory, Replacement Cost and Market Value would be equal only when factors of supply and demand are in perfect balance; a condition which is extremely rare in an active market.
Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a property.
Reality: Appraisers perform a detailed analysis of all factors in consideration to the value of a home, including its location, condition, size, amenities, proximity to supporting facilities and recent sale prices of comparable houses. Values per square foot, even within the same subdivision, can vary over an extremely broad range depending on those factors.
Myth: In a strong economy - when the sales prices of homes in a given neighborhood are found to be appreciating by a certain percentage - the values of individual homes in the area can be expected to increase by that same percentage.
Reality: The appreciation of a specific home must be determined on an individualized basis, factoring in data on comparable homes and other relevant elements (e.g., condition, amenities, etc). This is true in good economic times as well as bad.
Myth: Just seeing what the house looks like on the outside gives an excellent idea of its value.
Reality: There are a multitude of different factors that lead to an Appraiser's conclusion regarding the value of a home; these factors include interior condition, improvements, quality and amenities, which cannot be determined based solely upon an exterior inspection. Appraisals based on exterior-only inspecitons are based on the assumption that the interior of the home is Average in all material respects and that all data noted in the assessor's records (e.g., size, age, permitted renovations, basement finishes, etc) are accurate in all material respects.
Myth: Considering that the consumer is the party paying for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report is theirs.
Reality: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Consumers must be supplied with a true copy of the report by the lender upon written request pursuant to the Equal Credit Opportunity Act, but Appraisers are not permitted to send appraisal reports to anyone but the lender.
Myth: There's no point for consumers to even concern themselves with what the appraisal contains so long as their lender is satisfied.
Reality: Only when home buyers check out a copy of their report can they double-check its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, as it contains a great deal of data - including, but certainly 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 vicinity.
Myth: The only reason someone would hire an appraiser is if a house needs its value determined in a lender-based sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to perform a variety 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 order a home inspection.
Reality: An appraisal report does not serve the same purpose as a home inspection report. The function of an appraisal is to arrive at an opinion of market value; the purpose of a home inspector is to approximate the condition of the home and its main components, then write a report on their findings.
