Below are four myths that clients might express about the valuation process and the factsÂ real estate agentsÂ can share with them:
Myth 1: â€˜I donâ€™t need an appraisal because Iâ€™ve had a home inspection.â€™
Fact:Â A major difference is that inspections are not required, butÂ appraisalsÂ oftenÂ areÂ required if the consumer is getting financing.
Although there might be someÂ similarities, a home inspection determines the condition of the property and an appraisal indicates the value.
According to anÂ Appraisal Institute handout, an appraisal is a credible and reliable opinion of value derived from factors that include research into appropriate market areas, the assembly and analysis of information pertinent to a property and the knowledge, experience and professional judgment of the appraiser.
Myth 2: â€˜All appraisers are the same.â€™
Fact:Â At a minimum, all states requireÂ appraisersÂ to be state licensed or certified to provide appraisals to federally regulated lenders.
But, as in other professions, appraisersâ€™ experience, expertise and certifications might vary.
Real estate agents can recommend that clients ask their lenders to hire an appraiser experienced in valuing similar properties and one who has gone beyond meeting minimal professional requirements.
Myth 3: â€˜Every improvement has added to my homeâ€™s value.â€™
Fact:Â Home improvement projects are not necessarily investments in which a homeowner should expect a dollar-for-dollar return.
According to Remodeling magazineâ€™s most recentÂ Cost vs. Value Report, the projects with the highest expected return on investment are attic insulation, manufactured stone veneer and garage door replacement.
Other projects with potential payoffs, according to the report, are entry door replacement (steel and fiberglass) and minor kitchen remodels.
Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home. If the improvements donâ€™t match whatâ€™s standard in a community, theyâ€™ll be considered excessive.
Myth 4: â€˜The appraisal is below the list price of my house, and thereâ€™s nothing I can do about it.â€™
Fact:Â Appraisers strive to generate credible and reliable opinions of value, butÂ mistakes can happen.
Homeowners can review a copy of the appraisal report, which lenders should provide to them free of charge no later than three days before the loanâ€™s closing.
Agents should urge clients or their lenders to review it carefully and confirm the accuracy of data on square footage, number of bedrooms and baths and similar features.
If the homeowner finds errors, he or she should contact the lender and potentially request another appraisal.
Real estate agents can help their clients understand the valuation process by telling them thatÂ appraisalsÂ are intended not to confirm a homeâ€™s sales price, but to assist lenders in lending decisions.
Appraisers are independent third-party experts and highly trained and experienced valuation professionals.
By alleviating anxiety about the valuation process, agents can help make their clientsâ€™ real estate transactions more productive and efficient.
Scott Robinson, MAI, SRA, AI-GRS, is the 2016 president of the Appraisal Institute, the nationâ€™s largest professional association of real estate appraisers, with nearly 20,000 professionals in almost 60 countries throughout the world.Â
This article originally appeared on Inman.com