Myth: Market value needs to be similar to the assessed value of the property.
Reality: It is probable that New Jersey, like most states, supports the common myth that the assessed value is no different from the market value; however, this is sometimes the exception rather than the rule.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby houses are excellent examples of why this occurs.
Myth: The opinion of value of a home will differ depending upon whether the appraisal is produced for the buyer or the seller.
Reality: The cost of the house does not affect the payment of the appraiser; because of this, the appraiser has no personal interest in the price of the property. This means that he will conduct services with impartiality and objectivity regardless of for whom the appraisal is conducted.
Myth: Any time market value is calculated, it should be the same as the replacement cost of the property.
Reality: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a certain property, with neither being under undue influence to buy or sell.
If the home were reconstructed, the dollar amount necessary to do so would form the replacement cost.
Myth: Certain formulae, such as the price per square foot, are the methods appraisers use to arrive at the value of a home.
Reality: Appraisers complete a comprehensive analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.
Myth: When the economy is strong and the sales prices of properties are found to be appreciating by a certain percentage, the other houses in the area can be expected to increase based on that same percentage.
Reality: All appreciation of value is on a one-on-one basis, determined by data on relevant elements and the data of comparable properties.
This is true in strong economic times as well as poor.
Myth: The home's outside is determinate of the actual value of the house; it is unnecessary to do an interior inspection.
Reality: There are a multitude of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends.
There's no real way to get all of this data from simply inspecting the property from the outside.
Myth: Since the consumer is the one who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.
Reality: Legally, the appraisal is owned by the lending company unless the lender relinquishes their interest in the appraisal.
Due the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lender.
Myth: There's no need for consumers to even concern themselves with what the report contains so long as their lending institution is fine with the contents therein.
Reality: It is a very good idea for consumers to check over a copy of their appraisal report so that they can verify the accuracy of the report, in case it's required to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make.
There is a wealth of information stored in an appraisal report that should be useful to the home buyer in the future, such as 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: Appraisals are ordered only to assess real estate property values in property sales involving mortgage-lending transactions.
Reality: Based upon their qualifications and designations, appraisers can and will perform a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal is no different than a home inspection.
Reality: An appraisal does not fulfill the same purpose as an inspection report.
An appraiser concludes on an opinion of value in the appraisal process and resulting appraisal.
A home inspector determines the condition of the house and its main components and reports their findings.
