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Friday's Blog Part II

I recently reported on a class I attended at the local Real Estate Board on the appraisal aspects of real estate. It was called aœMaking Sense of Home Values in this Crazy Marketa. The speaker was an appraiser from DS Murphy, one of the largest appraisal companies in the area.


I had a question about the effect of a land fill on new homes, e.g. building near an existing landfill. At the end of the class I asked where I might do some further research on the subject and the instructor pointed me to a web site fir the appraisal Industry. It is called the Apprasial Institute and they can be found at http://info.appraisalinstitute.org. I signed up for their newsletter and though Ia™d share an article about appraisal myths.


When consumers proceed on the purchase or sale of a home, or to refinance, securing an appraisal is a key step in the process. However, some misconceptions exist relative to appraisals and appraisers, and the Appraisal Institute encourages individuals to understand the following myths and realities.


Myth:  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.


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.



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.


Myth: In a robust economy a when the sales prices of homes in a given area are reported to be rising by a particular percentage a 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.


Myth: You generally can tell what a property is worth simply by looking at the outside.


Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities and market trends.


Myth: Because consumers pay for appraisals, they own their appraisal.


Reality: The appraisal is legally owned by the lender a unless the lender aœreleases its interesta in the document. However, effective Jan. 21, 2013, a new requirement of the Dodd-Frank Act will mandate that creditors furnish a free copy of all appraisals and valuations on applications for loans for first liens on dwellings promptly upon completion, but no later than three days prior to closing.


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.

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