Appraisal myths & facts

It is enforced by legal agencies that a real estate appraiser needs to be state-licensed to produce appraisals for federally-supported home purchases in Texas. Also by law, you have the right to request a copy of the completed appraisal report from your lender. Contact us if you have any questions about the appraisal procedure.

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

Fact: This is not often the case; most states do support the concept that the assessed value is the same as market value, but not always. Interior reconstruction that the assessor is unaware of and a lack of reassessment on nearby properties are perfect examples of why this occurs.

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

Fact: The appraiser has no vested interest in the result of the appraisal and should render his task with independence, objectivity and impartiality - no matter for whom the appraisal is written.

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

Fact: Market value is derived from what a willing buyer would be interested in paying a willing seller for a particular house, with neither being under duress to buy or sell. The dollar amount necessary to reconstruct a property is what shows the replacement cost.

Myth: Appraisers use a formula, such as a specific price per square foot, to conclude the value of a house.

Fact: There are many varied processes that an appraiser will use to make a comprehensive analysis of every factor in consideration of the property, such as the size, location, condition, how close it is to certain facilities and the opinion of value of recently sold comparable homes.

Myth: In a powerful economy - when the sales prices of properties in a given area are reported to be appreciating by a particular percentage - the worth of individual houses in the area can be expected to rise by that same percentage.

Fact: Any value at which an appraiser arrives in regards to a particular home is always personalized, based on certain factors concluded from the information of comparable homes and other considerations within the home itself. It doesn't matter if the economy is doing well or declining.

Myth: You can commonly tell what a property is worth simply by looking at the outside.

Fact: To find an accurate value beyond all doubt, an appraiser must inspect the property on a variety of factors based on area, condition, improvements, amenities, and market trends. An external inspection obviously can't provide all of the information needed.

Myth: Because consumers fund the appraisal when applying for loans to purchase or refinance their property, they own their appraisal report.

Fact: Unless a lender releases its interest in the document, it is legally owned by the lending agency that ordered the appraisal. Home buyers must be supplied with a copy of the document upon written request due to the Equal Credit Opportunity Act.

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

Fact: Only if home buyers look over a copy of their appraisal report can they double-check its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, filled with useful 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.