Appraisal myths & facts

Legally, a real estate appraiser must be state certified to create legitimate appraisal reports for federally-related purchase. You are also entitled by law to demand a copy of the finished appraisal report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

Myth: Market value must be the same as the assessed value of the property.

Fact: It is possible that Texas, like most states, supports the idea that the assessed value equals the market value; however, this is sometimes the exception rather than the rule. Examples include when interior reconstruction has occurred and the assessor has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.

Myth: The buyer or the seller sometimes may have leverage in the value of the property depending upon for whom the appraiser is working.

Fact: The appraiser has no personal interest in the result of the appraisal report and should conduct his job with independence, objectivity and impartiality - no matter for whom the appraisal is provided.

Myth: Any time market value is established, it should be the same as the replacement cost of the house.

Fact: The way market value is derived is based on what a buyer would be willing to pay a willing seller for a house without being under pressure from any external group to purchase or sell. The dollar amount necessary to reconstruct a house is what forms the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to figure out the worth of a property.

Fact: An appraisal is an amalgamation of information concluded from the house's size, location, proximity to undesirable facilities, the condition of the home and the cost of recent comparable sales. You can count on Appraisal Professionals's staff to be honest in assessing this data.

Myth: When the economy is strong and the value of houses are found to be increasing by a certain percentage, the other houses in the proximity can be expected to rise based on that same percentage.

Fact: Any value at which an appraiser concludes concerning a particular property is always individualized, based on certain factors pulled from the information of comparable houses and other considerations within the property itself. It doesn't matter if the economy is on the rise or declining.

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Myth: You can generally see what a property is worth simply by looking at the exterior.

Fact: Home worth is determined by a multitude of variables, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no real way to get all of this data from simply viewing the property from the exterior.

Myth: Because the consumer is the person who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal belongs to them.

Fact: Legally, the report is owned by the lending agency unless the lender relinquishes their interest in the document. Home buyers have to be given a copy of the document through request as per the Equal Credit Opportunity Act.

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

Fact: A consumer should definitely read through their appraisal report; there may be some questions or some worries with the accuracy of the inspection that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of information contained in an report that could be useful to the home buyer 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.

Myth: The only reason someone would order an appraisal is if a house needs its price assessed in a lender sales transaction.

Fact: Based upon their qualifications and designations, appraisers can and will provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: You don't have to get an appraisal if you get a home inspection.

Fact: Appraisal reports are nothing like a home inspection report. The job of the appraiser is to form an opinion of value in the appraisal process and through producing the report. House inspectors will produce a report that will determine the condition of the home and its major components and possible damage.