Appraisal myths & facts

By law, an appraiser is required to be state-licensed to perform appraisals for federally-supported sales. Also by law, you are allowed to demand a copy of the completed report from your lender. Contact our professional staff if you have any concerns about the appraisal process.

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

Fact: While most states support the idea that assessed value is equal to estimated market value, this usually is not the case. Sometimes when interior remodeling has occurred and the assessor is has not investigated the improvement or properties in the area have not been reassessed for years or more, it may vary wildly.

Myth: The opinion of value of a home will differ depending upon whether the appraisal is produced for the buyer or the seller.

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

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

Fact: Without any influence from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific property. If the property were reconstructed, the dollar amount needed to do so would form the replacement cost.

Myth: There are certain ways that appraisers use to determine the value of a house, such as the price per square foot.

Fact: There are many differing formulae that an appraiser will use to make a full investigation of every factor pertaining to the home, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.

Myth: In a powerful economy - when the costs of homes in a given area are found to be appreciating by a certain percentage - the values of individual properties in the proximity can be expected to appreciate by that same percentage.

Fact: All increase of worth is on a case-by-case basis, found by data on relevant conditions and the data of comparable houses. It makes no difference if the economy is good or terrible.

Have other questions about appraisers, appraising or real estate in Potter County or Amarillo, Texas?

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Myth: Just looking at what the property looks like on its exterior gives an idea of its cost.

Fact: Home value is concluded by a number of factors, including - but not limited to - location, condition, improvements, amenities, and market trends. There's no possible way to get all of this information from just viewing the home from the outside.

Myth: Because consumers fund appraisal reports when applying for loans to purchase or refinance real estate, they legally own their appraisal.

Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the document. However, consumers have to be supplied with a copy of the appraisal upon written request, through the Equal Credit Opportunity Act.

Myth: It doesn't matter to consumers what's in the appraisal so long as it meets the necessities of their lending company.

Fact: It is almost imperative for consumers to check over a copy of their appraisal so that they can verify the accuracy of the document, in case there is a need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. There is a wealth of data contained in an appraisal report that could 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 region.

Myth: Appraisers are hired only to estimate house values in house sales involving mortgage-lending deals.

Fact: Ordering an appraisal can fulfill a variety of necessities depending on the designations and certifications of the appraiser involved; appraisers can provide a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: An appraisal report does not fulfill the same purpose as an inspection. The point of an appraisal is to find an opinion of fair market value during the appraisal process and the production of the report. House inspectors will write a report that will determine the condition of the house and its major components and possible damage.