Real estate agents play a key role in helping consumers understand the valuation process, which can be confusing to many clients. Scott Robinson, president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers, pointed out in an article written for Inman.com some common misconceptions clients might express about the valuation process.
Myth No. 1: “I don’t need an appraisal because I’ve had a home inspection.”
Robinson wrote that although home inspections are not required, appraisals often are required if the consumer is getting financing. The key difference between the two is that an inspection determines the property’s condition, whereas an appraisal indicates the value.
Myth No. 2: “All appraisers are the same.”
Although it is true all states require appraisers to be state-licensed or certified to provide appraisals to federally regulated lenders, Robinson wrote “appraisers’ experience, expertise and certifications might vary.” He added that agents can recommend their clients ask their lenders to hire an appraiser with experience in valuing similar properties and one with more than minimal professional requirements.
Myth No. 3: “Every improvement has added to my home’s value.”
Homeowners should not expect a dollar-for-dollar return on all home improvement projects, according to Robinson. However, some projects are more beneficial than others. He pointed to a Remodeling magazine Cost vs. Value Report, which found the projects with the highest expected return on investment are attic insulation, manufactured stone veneer, and garage door replacement.
Myth No. 4: “The appraisal is below the list price of my house, and there’s nothing I can do about it.”
Although appraisers try to generate credible and reliable opinions of value, mistakes can happen, Robinson wrote. Homeowners can review a copy of the appraisal report to confirm the accuracy of data on such things as square footage and number of bedrooms and baths. If errors are found, the homeowner should contact the lender and possibly request another appraisal.
“By alleviating anxiety about the valuation process agents can help make their clients’ real estate transactions more productive and efficient,” Robinson wrote,
Source: “4 myth-busting facts about appraisal,” Inman.com (Nov. 1, 2016)