Myth: The value that is assessed by the appraiser should be equivalent to the market value.
Reality: It could be that Indiana, like most states, supports the common myth that the assessed value equals the market value; however, this is not often the case.
Examples include when interior reconstruction has happened and the assessor is unaware of the improvements, or when homes in the area have not been reassessed for an extended time.
Myth: The buyer or the seller will have an influence in the value of the property depending upon for whom the appraiser is working.
Reality: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will conduct his work with impartiality and independence, no matter of for whom the appraisal is ordered.
Myth: Market value will be the same as replacement cost.
Reality: The way market value is arrived at is based on what a buyer would be willing to pay a willing seller for a home without being under duress from any outside group to buy or sell.
Replacement value is the dollar amount needed to rebuild a property in-kind.
Myth: Specific methods, such as the price per square foot, are what appraisers use to ascertain the value of a home.
Reality: Appraisers complete a comprehensive analysis of all factors in consideration to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable houses.
Myth: As properties increase in value by a specific percentage - in a robust economic state - the properties within the same neighborhood are expected to increase by the same amount.
Reality: All appreciation of value is on an individual basis, concluded by data on relevant conditions and the data of comparable homes.
It makes no difference whether the economy is good or poor.
Myth: You can generally see what a property is worth simply by looking at the exterior.
Reality: To conclude a conclusive value beyond all doubt, an appraiser must assess the home on a variety of factors based on area, condition, improvements, amenities, and current market trends.
There's no possible way to get all of this data from simply inspecting the home from the outside.
Myth: Because consumers pay for appraisal reports when applying for loans to purchase or refinance their property, they own their appraisal report.
Reality: Legally, the report is owned by the lending company unless the lender relinquishes their interest in the report.
Due the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be provided with it by their lending agency.
Myth: It doesn't matter to consumers what's in the appraisal so long as it satisfies the requirements of their lending company.
Reality: A consumer should definitely look through their appraisal; there might be some questions or some concerns about the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal report makes a near perfect record for future reference, filled with useful 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: The only reason someone would order an appraisal is if a house needs its value estimated in a lender-based sales transaction.
Reality: Appraisers can have many varied qualifications and designations which allow them to provide a series 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: A property inspection serves the same purpose as an appraisal.
Reality: A home inspection report has a completely different purpose than an appraisal report.
The reason behind an appraisal report is to arrive at an opinion of market value during the appraisal process and the production of the appraisal.
House inspectors will produce a report that will explain the condition of the property and its major components and possible damage.