Appraisal myths & facts

It is required by legal agencies that an appraiser must be state-licensed to produce appraisal reports for federally-supported real estate purchases in Texas. Also by law, you have the right to receive a copy of the finished appraisal report from your lender. Contact Harper & Strickland, Inc. if you have any questions about the appraisal process.

Myth: The value that is assessed by the appraiser should be the same as the market value.

Fact: While most states back 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 lack of reassessment on nearby homes are prime examples of why the price can vary.

Myth: Depending on whether the appraisal is provided for the buyer or the seller, the appraised value of the house will vary.

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

Myth: The replacement value of the home is always is on par with the market value.

Fact: Market value is based on what a willing buyer would likely pay a willing seller for a specific house, with neither being under pressure to buy or sell. If the property were rebuilt, the dollar amount needed to do so would make up the replacement cost.

Myth: Specific methods, such as the price per square foot of the property, are the ways appraisers use to arrive at the price of a property.

Fact: There are many numerous calculations 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 specific facilities and the sales price of recently sold comparable properties.

Myth: When the economy is robust and the value of houses are found to be appreciating by a certain percentage, the other properties in the proximity can be expected to appreciate based on that same percentage.

Fact: Any price at which an appraiser arrives concerning a certain house is always personalized, based on certain factors derived from the data of comparable properties and other specifications within the property itself. It doesn't matter if the economy is doing well or declining.

Myth: The house's outside is determinate of the actual worth of the home; it is unnecessary to do an interior inspection.

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

Myth: Since you're the one coughing up the cash for the appraisal report when applying for the loan to purchase or refinance your home, you own the provided appraisal.

Fact: Legally, the document is owned by the lending company unless the lender relinquishes their interest in the report. Consumers must be provided with a copy of the appraisal report upon written request as per the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their report so long as it satisfies the requirements of their lending company.

Fact: It is a very good idea for consumers to read a copy of their appraisal so that they can double-check the accuracy of the report, in case they need to question its accuracy. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the report makes a near perfect record for future reference, filled with helpful and often-revealing information - including, but not limited to, 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.