While most states support the concept that assessed value approximate estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.
Doesn’t Market Value approximate replacement cost?
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.
Isn’t it in a robust economy – when the sales prices of homes in a given area are reported to be rising by a particular percentage – the value of individual properties in the area can be expected to appreciate by that same percentage?
Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.
Is it true that because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal?
The appraisal is, in fact, legally owned by the lender – unless the lender “releases its interest” in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act. As a matter of client confidentiality, technically the owner of the report ‘Client’ is the person or entity that engages the appraiser.
Isn’t it true that Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution?
Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information – including 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.
An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.
There are different type of licensing within the State of Pennsylvania and consumers need to be aware. The lending institutions are already aware of the differences and that is why they hire Certified Appraisers.