Appraisal myths debunked

It is mandated by the government that a real estate appraiser needs to be state-licensed to create appraisal reports for federally-supported property purchases in Texas. You also have the right to receive a copy of the finished report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

Myth: The value that is assessed by the appraiser should be equivalent to the market value.

Fact: While most states support the idea that assessed value approximates estimated market value, this generally is not the case. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are perfect examples of why there might be a differential in price.

Myth: The appraised value of a property will change depending upon if the appraisal is produced for the buyer or the seller.

Fact: There is no real interest on the part of the appraiser in the outcome of the analysis, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is conducted.

Myth: Market value should equate to replacement cost.

Fact: Without any pressure from any different parties to buy or sell, market value is what a willing buyer would pay a willing seller for a specific house. The dollar amount demanded to rebuild a house is what constitutes the replacement cost.

Myth: There are certain methods that real estate appraisers use to find the opinion of value of a home, like the price per square foot.

Fact: Appraisers complete a comprehensive analysis of all factors in consideration to the worth of a house, including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: When the economy is robust and the sales prices of homes are reported to be appreciating by a certain percentage, the other homes in the area can be expected to rise based on that same percentage.

Fact: All increase of value is on a case-by-case basis, concluded by data on relevant conditions and the data of comparable houses. This is true in fair economic times as well as bad.

Myth: Just seeing what the property looks like on the outside gives an excellent idea of its value.

Fact: There are a multitude of different factors that show property value; these factors include location, condition, improvements, amenities, and market trends. As you can see, none of these things can be found simply by viewing the property from the exterior.

Myth: Because consumers fund appraisal reports when applying for loans to buy or refinance their property, they own their appraisal.

Fact: The report is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal. However, home buyers have to be provided with a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no need for home buyers to even worry about what the report contains so long as their lending institution is satisfied.

Fact: A home buyer should definitely read through their report; there could be some questions or some concerns with the accuracy of the report that must be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data contained in an report that will probably be useful to the consumer in the future, such as 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 area.