Myth: Market value has to be equivocal to the assessed value of the property.
Reality: It might be that Puerto Rico, like most states, supports the idea that the assessed value is the same as the market value; however, this is not often the case.
Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are excellent examples of why the price can vary.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the appraised value of the house will vary.
Reality: The value of the house does not affect the pay of the appraiser; as such, the appraiser has no personal interest in the opinion of value of the property. Obviously, he will provide task with impartiality and independence regardless of for whom the appraisal is produced.
Myth: Market value should equate to replacement cost.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a particular property, with neither being under undue influence to buy or sell.
The dollar amount required to reconstruct a property is what forms the replacement cost.
Myth: Specific methods, like the price per square foot of the property, are what appraisers use to arrive at the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a house, including its location, condition, size, proximity to facilities and recent values of comparable homes.
Myth: When the economy is doing well and the sales prices of properties are reported to be rising by a certain percentage, the other homes in the neighborhood can be expected to appreciate based on that same percentage.
Reality: All appreciation of value is on a case-by-case basis, found by data on relevant considerations and the data of comparable properties.
It doesn't matter if the economy is doing well or declining.
Myth: Just looking at what the property looks like on the outside gives an idea of its value.
Reality: To determine a conclusive value beyond all doubt, an appraiser must examine the home on a variety of factors based on area, condition, improvements, amenities, and market trends.
An outside-only inspection obviously can't provide all of the information necessary.
Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance their house, they legally own their appraisal.
Reality: The appraisal report is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the appraisal.
However, consumers have to be given a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the needs of their lender.
Reality: It is very important for home buyers to look at a copy of their appraisal so that they can verify the accuracy of the document, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make.
Also, the appraisal makes a near perfect record for future reference, comprised of helpful and often-revealing information - 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 area.
Myth: The only reason someone would order an appraisal is if a home needs its value estimated in a lender sales transaction.
Reality: Ordering an appraisal can fulfill a variety of needs depending on the designations and certifications of the appraiser involved; appraisers can perform a multitude of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: An appraisal report is the same as a home inspection report.
Reality: An appraisal report does not fulfill the same purpose as an inspection.
The purpose of an appraisal is to form an opinion of market value during the appraisal process and the completion of the report.
A home inspector assesses the condition of the home and its major components and reports these findings.