Myth: Assessed value generally will equate market value.
Reality: It could be that Minnesota, like most states, supports the idea that the assessed value is the same as the market value; however, this is not always true.
Interior reconstruction that the assessor has not investigated and a lack of reassessment on nearby properties are exact examples of why the price can vary.
Myth: Depending on if the appraisal is drawn up for the buyer or the seller, the value of the property will vary.
Reality: The appraiser has no vested interest in the result of the appraisal report and should conduct services with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: Any time market value is established, it should equal the replacement cost of the property.
Reality: 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 particular house.
The replacement cost is the dollar amount necessary to reconstruct a property in-kind.
Myth: Specific formulae, like the price per square foot, are what appraisers use to arrive at the value of a house.
Reality: Appraisers complete a full analysis of all factors in consideration to the value of a home, including its location, condition, size, proximity to facilities and recent sale prices of comparable homes.
Myth: When the economy is strong and the sales prices of properties are found to be increasing by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Reality: All increase of value is on a one-on-one basis, determined by data on relevant conditions and the data of comparable properties.
It makes no difference whether the economy is strong or poor.
Myth: You can often find what a home is worth simply by looking at the outside.
Reality: Property value is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends.
As you can see, none of these factors can be found simply by examining the house from the exterior.
Myth: Since you're the one paying for the appraisal when applying for your loan to buy or refinance your home, you own the ordered appraisal report.
Reality: Legally, the appraisal is owned by the lending agency unless the lender releases their interest in the document.
Under the Equal Credit Opportunity Act, any home buyer demanding a copy of the report must be provided with it by their lending company.
Myth: Home buyers need not care about what is in their appraisal so long as it meets the necessities of their lending institution.
Reality: A home buyer should definitely look through their document; there could be some questions or some worries about the accuracy of the inspection that should 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 vicinity.
Myth: Appraisals are ordered only to estimate home values in property sales involving mortgage-lending deals.
Reality: Depending upon their qualifications and designations, appraisers can and may perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: You don't need to get an appraisal if you order a home inspection.
Reality: Appraisal reports are definitely not the same as a home inspection report.
The reason behind an appraisal is to find an opinion of market value during the appraisal process and the production of the appraisal report.
The point of a home inspector is to find the condition of the home and its main components, then compose a report on their conclusions.
