Myth: Your assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximates estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.
Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality — no matter for whom the appraisal is conducted.
Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind. Market value and replacement cost are seldom similar.
Myth: In a robust economy — when the sales prices of homes in a given area are reported to be rising by a particular percentage — the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.
Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a large number of factors including market conditions, location, appeal of the site, condition of the building, improvements and updating, amenities, market trends, and others. Appraisers must be aware of, and consider all major factors which contribute to, or limit value.
Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lender — unless the lender “releases its interest” in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.
Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only by reading a copy of their appraisal can consumers double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often revealing information — including the legal and physical description of the property, square footage measurements, list of comparable properties, description of the general market area and current market trends in the vicinity.
Mark Heckman Real Estate Appraisers
1309 Bridge Street, New Cumberland, PA 17070 - Phone: (717) 774-7202 Fax: (717) 774-0383
Copyright 2007-2011. Mark Heckman Real Estate Appraisers. All rights reserved.