Being in the business of working with appraisers, we happen to know that there are a lot of myths out there surrounding the business. In talking with more experienced people, there were a few that stood out to us and something we felt necessary to share. To be exact there are Six Myths discussed below. Perhaps those who haven’t been in the business as long may not have come across these issues yet. In speaking to experienced appraisers, they wanted to get the message out there to their colleagues on what to look out for as they move forward.
Appraising a property is a difficult task that requires plenty of research, a keen eye for detail, and the proper support systems to be successful. Having a deep knowledge base, and an idea of what potential issues to look out for can only serve those in the business positively.
Six Myths Uncovered
A lot of these six myths are often perpetuated by those who feel slighted or those who simply don’t know better. Those in the business have encountered all sorts of myths over the years, and with their help, we’d like to bring some clarity to any outstanding matters to serve those who may believe otherwise. With that said, here are six common myths about the business of home appraisal we would like to uncover.
Myth #1: Appraising isn’t regulated
many people believe that appraisers aren’t held to strict standards or regulations and do their jobs without checks and balances. This couldn’t be further from the truth, as all appraisers are beholden to professional standards codes. Appraisal Institutes are set up around the world for specific countries and states/provinces. These standards govern the appraisal methodology of all members as well as the business practices and professional conduct. These guidelines ensure that the consumer receives the highest quality services from the members.
Myth #2: Appraisers will undervalue your home
There’s a common misconception that appraisers will undervalue properties because they are in the pocket of the bank or someone else. This couldn’t be further from the truth as appraisers’ valuations are fact and market-based. An appraisal will always be an objective valuation of a property. That number may occasionally be lower or higher than what the property owner has in mind, but the number is never manipulated to serve someone behind the scenes. As we mentioned, appraising can be a tricky practice, but the numbers are above board and should be trusted.
Myth #3: Appraisers work for the banks
The appraiser, in fact, works for the lender. Although they may be paid for by the borrower, the appraiser’s job is to provide an analysis of the collateral, so that lenders know the value of the property before they make a decision on whether or not to lend. Again, the appraiser’s job is to objectively determine the value of a home so that everyone involved can make a decision. It will help the lender decide whether they want to take the risk, and help the buyer decide whether the sale price is fair for them.
Myth #4: Appraisers set the value of a home
The value of the property is set by those selling it, with the appraiser offering their research-based opinion on what the value of said property may be. The number the appraiser arrives at isn’t ironclad, nor is it to be completely ignored. It’s a valuation meant to give the lender, seller, and potential buyer more information to work with. There are other factors involved, besides the appraiser’s valuation of the property.
Myth #5: Appraisers use a formula
There is some truth to this, in that appraisers have a certain way they go about appraising homes and what they consider during the process. What’s not true is that every property they appraise is a four-step process that doesn’t take into account outside and market factors. Each appraisal is different because of each valuation, even if two properties are side by side, have different aspects that need to be taken into consideration. To walk into each appraisal with the idea of checking off a few boxes and moving on to the next would be in violation of the code of standards.
Myth #6: An appraisal is the same as a home inspection
While an appraiser will take into account things that are obvious to the naked eye in their inspections, their job is to provide an objective analysis about the overall value of the property so the lender can understand the risk. A home inspector is hired by the borrower to dig deeper to look into the insides of a home for future and current risks. It’s to assess the structural integrity of the home and alert the borrower of any hidden risks or coming costs.
That’s our Six Myths Uncovered blog post! Anow was created for appraisers, by appraisers and we know it will help you grow your business.
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