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Myths And Realities About Real Estate Appraisals And Appraisers

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Myth: Assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximates 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.

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity, and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.
Reality: 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.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities, and recent sale prices of comparable properties.

Myth: 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.
Reality: 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.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: 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.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: 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.

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review, and cost/benefit analysis.

Myth: An Appraisal is the same as a home inspection.
Reality: 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.

 

J. Myers & Associates Inc. - 5098 28th Avenue South West - Naples, FL 34116 - Phone: 239-793-3430 - Fax: 239-793-3430 - JasonMyers@embarqmail.com

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What Is A Lease On Property?

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A Lease is an agreement, which creates the relationship of landlord and tenant.  The landlord leases to the tenant exclusive possession of land or tenements for a period of time.  The length of the Lease may be for a determinate period of time or at will.  The land subject to the Lease is sometimes referred to as the “leasehold.”  A Lease should contain, at the minimum: the length of the Lease, the amount of the rent, the payment periods, a clear identification of the parties to the Lease including their addresses, a clear description of the property leased, the amount of any security deposit, and any other terms agreed upon by the parties.  State law may require that other terms be included in the Lease, such as identifying the landlord and his/her agent able to receive notices, the time and manner of rent increases, and the method of termination.  Leases or rental agreements, as a form of contract, imply a duty of good faith upon the parties to the agreement.  In addition, a Lease or rental agreement usually implies other terms, even if they are not specified.  The Lease usually implies a covenant of quiet enjoyment.  This is a covenant given by a landlord to the tenant arising from the terms of the Lease by law.  The tenant is able to enjoy the possession of the premises in peace and without disturbance.  Regardless of whether it is included in the Lease, most states have held that the tenant has an implied right of quiet enjoyment of the premises.  Another covenant usually implied in a Lease is the warranty of habitability.  The warranty of habitability means that the premises are suitable for habitation by people.  The Lease or rental agreement also implies that the landlord holds possession of the land or tenements and is able to lease or rent them.

 

Leases for more than one (1) year must be in writing and signed to be enforceable.  Residential Leases should be in writing, and a copy of the Lease must be delivered to the tenant at the beginning of the Lease.  

 

Oral Leases for more than the time period specified by law are still valid between the parties.  However, if a dispute arises between the parties, the fact that it is not in writing may make it unenforceable.  The advantage of putting a Lease in writing is that it reduces the possibility of disputes arising between the parties due to ambiguity or uncertainty.

 

There are several types of Leases.  The Lease or rental agreement creates a tenancy.  A tenancy is an interest in real estate or tenement belonging to the tenant who possesses it exclusive of others except as the Lease or law may permit a landlord’s right of entry to demand rent or to make repairs.  A Lease may be for a specific time period as stated in the rental agreement.   A tenancy that has no fixed time period is known as a tenancy at will.  If the length of the Lease is not specified in the rental agreement, the length is determined by the payment periods for rent.  The length may be week-to-week, month-to-month or year-to-year.  These types of Leases are sometimes referred to as periodic estates.  If the tenant remains on the premises after expiration of the Lease without the landlord’s consent, a holdover tenancy results.  A tenant who remains on the premises after expiration of the Lease is known as a “holdover tenant” or a “tenant at sufferance.”  If the landlord chooses to consent to the continued presence of the holdover tenant, the tenancy becomes a tenancy at will.

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What Is A Mechanics’ Lien On Property?

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A Mechanics’ Lien is a lien (or encumbrance) on real estate held by a person for labor, service or materials furnished in connection with the construction or improvement of real estate. The claim will allow for interest or right to property, or a portion of it, by the lien holder that arises by law or agreement until payment of a debt or liability is satisfied.  This type of lien is typically codified by a statute of the state which governs the creation, extent, filing, and foreclosure of the lien. The time limitations for filing of the lien and foreclosure of it are set by statute.

In many cases, a lien on property must be removed before the sale of the property may commence.

For most states, the lien must be verified or sworn under oath and must include the names and addresses of the lien claimant, the owner of the real estate, and/or their agent, the street address and legal description of the real estate subject to the lien, the amount due or claimed, including an itemized list of labor or materials furnished, the nature of the work performed, and when the work began and ended. The time for filing of the lien determines its priority with respect to other liens on the real estate.  Please see specific state for details and/or differences.

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