Appraisal myths & facts

It is mandated by legal agencies that an appraiser needs to be state-licensed to create appraisals for federally-related home purchases in Texas. You have the ability to acquire a copy of the completed report from your lender. Contact us if you have any concerns about the appraisal process.

Myth: Market value will always be similar to the assessed value of the property.

Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Often when interior remodeling has occurred and the assessor is not aware of the improvement or other homes in the neighborhood have not been reassessed for quite a while, it may vary wildly.

Myth: The buyer or the seller often will have some pull in the cost of the home depending upon for whom the appraiser is working.

Fact: The appraiser has no vested interest in the outcome of the appraisal report and should complete services with independence, objectivity and impartiality - no matter for whom the appraisal is written.

Myth: Any time market value is found, it should equate to the replacement cost of the house.

Fact: Market value is arrived at through what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under pressure to buy or sell. Replacement value is the dollar amount needed to rebuild a house in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a property.

Fact: Appraisers make an exhaustive analysis of all factors pertaining to the value of a home, including its location, condition, size, proximity to facilities and recent worth of comparable homes.

Myth: In a robust economy - when the costs of houses in a given area are reported to be rising by a particular percentage - the costs of individual homes in the area can be expected to rise by that same percentage.

Fact: Any worth at which an appraiser concludes concerning a certain property is always personalized, based on certain factors derived from the data of comparable properties and other specifications within the home itself. This is true in good economic times as well as poor.

Myth: Just seeing what the home looks like on its exterior gives an excellent idea of its cost.

Fact: To find an accurate price beyond all doubt, an appraiser must examine the property on a variety of factors based on area, condition, improvements, amenities, and current market trends. There's no real way to get all of this information from simply inspecting the house from the exterior.

Myth: Since you're the one providing the money for the appraisal when applying for your loan to buy or refinance real estate, you own the ordered appraisal report.

Fact: Legally, the appraisal report is owned by the lending agency unless the lender relinquishes their interest in the appraisal. Under the Equal Credit Opportunity Act, any consumer demanding a copy of the document must be given it by their lending company.

Myth: There's no need for consumers to even care about what the report contains so long as their lending agency is satisfied.

Fact: It is very important for home buyers 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 veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a valuable record for future reference, filled with 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 vicinity.