Appraisal myths & facts
It is required by law that a real estate appraiser is required to be state-licensed to perform appraisal reports for federally-supported home sales in Texas. The law gives you the right to acquire a copy of your completed report from your lending agency after it has been provided. Contact our professional staff if you have any concerns about the appraisal process.
Myth: Market value has to be equivocal to the assessed value of the property.
Fact: While most states uphold the idea that assessed value is the same as estimated market value, this often is not the case. Interior reconstruction that the assessor is not aware of and a dearth of reassessment on nearby properties are prime examples of why the price can vary.
Myth: The buyer or the seller often will have an influence in the value of the home depending upon for whom the appraiser is working.
Fact: The appraiser has no personal interest in the outcome of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is written.
Myth: The replacement cost of the home will be is on par with the market value.
Fact: The way market value is found is based on what a buyer would be willing to pay a willing seller for a home without being under influence from any external party to buy or sell. The replacement cost is the dollar amount required to reconstruct a house in-kind.
Myth: Appraisers use a calculation, like a specific price per square foot, to figure out the value of a property.
Fact: There are many differing ways that an appraiser will use to make a full investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the value of recently sold comparable houses.
Myth: As properties appreciate by a specific percentage - in a strong economy - the properties around the appreciating properties are figured to appreciate by the same amount.
Fact: Any cost at which an appraiser arrives in regards to a specific home is always personalized, based on certain factors found from the information of comparable homes and other considerations within the home itself. It makes no difference if the economy is robust or on the decline.
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Myth: You can generally find what a house is worth simply by looking at the exterior.
Fact: There are a number of different variables that conclude property value; these factors include location, condition, improvements, amenities, and market trends. Obviously, none of these factors can be found simply by looking at the property from the exterior.
Myth: Since you're the one providing the money for the appraisal report when applying for your loan to purchase or refinance your home, you own the provided appraisal.
Fact: Legally, the appraisal report is owned by the lender unless the lender releases their interest in the report. Consumers must be given a version of the appraisal report upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't concern consumers what's in the appraisal report so long as it satisfies the requirements of their lending company.
Fact: A home buyer should definitely look through their report; there might be some questions or some concerns with the accuracy of the report that should 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 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 vicinity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the cost of a house during a sales transaction involving a lending institution.
Fact: Ordering an appraisal can fulfill a variety of needs 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: An appraisal is no different than a home inspection report.
Fact: An appraisal report does not fulfill the same purpose as an inspection report. The appraiser decides upon an opinion of value in the appraisal process and resulting report. The job of a home inspector is to approximate the condition of the house and its major components, then provide a report on their conclusions.