Common myths about appraising

It is mandated by the government that a real estate appraiser needs to be state-licensed to create appraisal reports for federally-supported property sales in Puerto Rico. You are also entitled by law to receive a copy of the finished report from your lender. Contact us if you have any questions about the appraisal process.

Myth: Assessed value generally will be similar to to market value.

Fact: It is probable that Puerto Rico, like most states, supports the idea that the assessed value is no different from the market value; however, this is not always true. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.

Myth: The buyer or the seller often will have some pull in the value of the property depending upon for whom the appraiser is working.

Fact: There is no vested interest on the part of the appraiser in the outcome of the appraisal report, therefore he will complete his work with impartiality and independence, regardless for whom the appraisal is written.

Myth: The replacement value of the house will be is on par with the market value.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a specific house, with neither being under undue influence to buy or sell. If the property were rebuilt, the dollar amount required to do so would make up the replacement cost.

Myth: Certain methods, such as the price per square foot, are what appraisers use to arrive at the price of a home.

Fact: An appraisal report is an amalgamation of information concluded from the home's size, location, proximity to specific facilities, the condition of the property and the cost of recent comparable sales. You can rely on Appraisal Advisors Group's staff to be professional in assessing this information.

Myth: When the economy is robust and the cost of properties are found to be rising by a certain percentage, the other homes in the proximity can be expected to rise based on that same percentage.

Fact: Any cost at which an appraiser arrives concerning a specific property is always individualized, based on certain factors found from the data of comparable houses and other specifications within the house itself. This is true in strong economic times as well as bad.

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Myth: You can often find what a property is worth simply by looking at the exterior.

Fact: House worth is determined by a number of factors, 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 inspecting the home from the exterior.

Myth: Because consumers pay for appraisal reports when applying for loans to buy or refinance their house, they legally own their appraisal report.

Fact: Legally, the document is owned by the lender unless the lender releases their interest in the appraisal. However, home buyers have to be supplied with a copy of the document upon written request, under the Equal Credit Opportunity Act.

Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the needs of their lender.

Fact: It is almost imperative for consumers to go through a copy of their report so that they can double-check the accuracy of the report, in case it's required to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a great deal of data contained in an appraisal report that will probably 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: The only reason someone would hire an appraiser is if a property needs its cost estimated in a lender sales transaction.

Fact: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: An appraisal is no different than a home inspection report.

Fact: A home inspection has a completely different purpose than an appraisal. The point of an appraisal report is to arrive at an opinion of fair market value during the appraisal process and the completion of the appraisal. The task of a home inspector is to approximate the condition of the home and its major components, then provide a report on their inspection.