Appraisals play an important role in the real estate sector. You can find out the current and appropriate market value of any property only with help of appraisers. Each real estate property is unique and appraisers determine a fair and accurate market value of a property by using their general expertise, experiences, and specific research. If you own a house or any other piece of property, you may be aware of the importance of getting an appraisal and the concept of how it works. Generally, appraisals are infrequent experiences for most of the residents, who, eventually, tend to have some misconceptions about the process and outcomes. Here are some myths and facts that are common among citizens.
Myth 1: Any individual who has a clipboard, business cards, and some knowledge on real estate properties can be an appraiser.
Fact 1: No one can become an appraiser just by owning a clipboard, business cards, and a bit of knowledge regarding real estate properties. Federal law has established minimum standards and licensing practices for real estate appraisers. Individuals, who are aspiring to become appraisers, need to take several courses, clear an examination, and complete supervised experience for a stipulated amount of hours.
Myth 2: The prime aim of an appraisal is to ensure that the buyer pays a reasonable rate for a house.
Fact 2: A real estate appraiser provides relevant and valuable information to the buyer and seller with regard to the property of their interest. However, the appraiser’s prime aim is to protect the lender. As a matter of fact, lenders do not enjoy owning over-rated property any more than they prefer lending money to irresponsible borrowers. This is why the property appraisal takes place before the lender grants final approval for the home buyer’s loan.
Myth 3: Property appraisers have no obligation to unveil faults and deformities existing in the home to the buyers.
Fact 3: One of the prime duties of a New Jersey property appraiser is to reveal the faults and deformities existing in the subject property to its buyer. If the home buyer is applying for a mortgage that will be insured by the FHA, the property appraiser must consider all aspects of the house, survey the physical condition of the property, and make the buyer aware of the potential faults and problems.
Myth 4: A residential appraisal is identical to a home inspection.
Fact 4: Any appraisal is not a substitute for a professional home inspection. Appraisal and home inspection differs considerably. In a residential appraisal, the appraiser comes to a fair opinion on the value of the home by using residential real estate appraisal guidelines for the lender. On the other hand, an inspector conducts home inspections to educate the buyer about the physical condition of the home and its major aspects.
Myth 5: If the property appraiser’s opinion of property’s value is lower than the purchase price, the buyer would be unable to buy the particular home.
Fact 5: In spite of a low appraisal, home buyer can purchase the desired home if the seller reduces the purchase price. In such circumstances, the buyer makes a big down payment or creates a separate escrow account in order to fund repairs that will enhance the value of the house. In some cases, the appraiser even reconsiders his or her opinion of property’s value if any new evidence supports a higher appraisal.
Dispelling these five myths and understanding the facts concerned with real estate appraisal, you can drive away the misconceptions related to residential appraisals. Then you will be able to look at the concept of appraisal with a broader mind and enjoy its benefits when dealing with any real estate transaction.