Common myths about appraising

It is required by law that a real estate appraiser is required to be state-licensed to offer appraisals for federally-supported real estate sales in Texas. You are also entitled by law to receive a copy of the finished report from your lending agency. Contact our professional staff if you have any questions about the appraisal process.

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

Fact: It could be that Texas, like most states, supports the common myth that the assessed value equates to the market value; however, this certainly varies based on state-to-state. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an extended period.

Myth: The buyer or the seller sometimes may have leverage in the cost of the home depending upon for whom the appraiser is working.

Fact: The value of the house does not affect the salary of the appraiser; as a result, the appraiser has no preconceived interest in the value of the house. This means that he will provide services with impartiality and independence regardless for whom the appraisal is conducted.

Myth: Any time market value is established, it should equal the replacement cost of the home.

Fact: Market value is acquired by what a willing buyer would be interested in paying a willing seller for a specific property, with neither being under undue influence to buy or sell. If the house were reconstructed, the dollar amount needed to do so would set the replacement cost.

Myth: Appraisers use a calculation, like a specific price per square foot, to come to the value of a home.

Fact: There are many different calculations that an appraiser will use to make an in-depth investigation of every factor in consideration of the house, such as the size, location, condition, how close it is to undesirable facilities and the value of recently sold comparable homes.

Myth: As properties appreciate by a certain percentage - in a strong economic state - the homes within the same neighborhood are figured to appreciate by the same amount.

Fact: Any cost at which an appraiser arrives concerning a certain house is always personalized, based on certain factors pulled from the information of comparable houses and other considerations within the house itself. It doesn't matter if the economy is on the rise or declining.

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

Fact: There are a multitude of different factors that determine property value; these factors include location, condition, improvements, amenities, and market trends. An exterior inspection certainly can't provide all of the data necessary.

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

Fact: The appraisal report is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the report. Consumers must be supplied with a version of the appraisal report through request due to the Equal Credit Opportunity Act.

Myth: There's no reason for consumers to even care about what the report contains so long as their lender is fine with the contents therein.

Fact: Only if home buyers look over a copy of their appraisal report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. An appraisal report can serve as a record for the future, since it contains an incredible amount of data - 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 proximity.