Appraisal myths debunked

It is required by law that a real estate appraiser must be state-licensed to perform appraisal reports for federally-supported home sales in Texas. Also by law, you are entitled to request a copy of the finished appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal procedure.

Myth: Assessed value should always be similar to to market value.

Fact: This usually isn't true; most states do support the idea that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is not aware of and a dearth of reassessment on nearby homes are exact examples of why the price can vary.

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

Fact: There is no vested interest on the part of the appraiser in the result of the report, therefore he will conduct his work with impartiality and independence, no matter for whom the appraisal is written.

Myth: Market value should be the same as replacement cost.

Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a property without being under duress from any outside party to buy or sell. If the property were reconstructed, the dollar amount necessary to do so would make up the replacement cost.

Myth: Appraisers use a formula, such as a certain price per square foot, to come to the cost of a house.

Fact: There are many differing processes that an appraiser will use to make a full investigation of every factor in consideration of the property, such as the size, location, condition, how close it is to undesirable facilities and the worth of recently sold comparable homes.

Myth: As homes increase their worth by a specific percentage - in a strong economy - the properties nearby are figured to appreciate by the same amount.

Fact: All increase of price is on an individual basis, concluded by information on relevant conditions and the data of comparable houses. It makes no difference whether the economy is strong or on the decline.

Myth: The property's exterior is determinate of the actual value of the property; there is no need to do an interior appraisal.

Fact: To find an accurate worth beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. Obviously, none of these variables can be found simply by looking at the home from the exterior.

Myth: Considering that the consumer is the party who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal report is theirs.

Fact: Unless a lending agency releases its vestment in the report, it is legally owned by the lending company that purchased the appraisal. Consumers have to be provided with a version of the document upon written request because of the Equal Credit Opportunity Act.

Myth: It doesn't mean anything to consumers what's in the appraisal so long as it satisfies the requirements of their lending company.

Fact: It is almost imperative for home buyers to look at a copy of their appraisal report so that they can verify the accuracy of the document, in case there is a need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes a valuable record for future reference, containing helpful 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 proximity.