Appraisal myths & facts

It is mandated by law that an appraiser must be state-licensed to create appraisal reports for federally-supported home purchases in Texas. The law entitles you to receive a copy of your finished appraisal from your lender after it has been provided. Contact us if you have any questions about the appraisal process.

Myth: The value that is ascertained by the appraiser is required to be equivalent to the market value.

Fact: It might be that Texas, like most states, supports the common myth that the assessed value is the same as the market value; however, this is not always true. Examples include when interior reconstruction has happened and the assessor has not seen the improvements, or when homes in the area have not been reassessed for an extended period.

Myth: The buyer or the seller may have an influence in the value of the property depending upon for whom the appraiser is working.

Fact: The appraiser has no personal interest in the outcome of the report and should conduct his task with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should equate to replacement cost.

Fact: Without any influence from any different parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific house. The replacement cost is the dollar amount necessary to rebuild a home in-kind.

Myth: Certain formulae, like the price per square foot of the property, are the methods appraisers use to determine the value of a house.

Fact: There are many differing ways that an appraiser will use to make a detailed investigation of every factor pertaining to the house, such as the size, location, condition, how close it is to certain facilities and the cost of recently sold comparable homes.

Myth: As houses increase their worth by a certain percentage - in a robust economic state - the houses around the appreciating properties are expected to appreciate by the same amount.

Fact: Cost increase of a certain property is always determined on a case-by-case basis, factoring in information on comparable properties and other relevant elements. It doesn't matter if the economy is doing well or declining.

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

Fact: There are a multitude of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. An exterior inspection obviously can't provide all of the information necessary.

Myth: Considering that the consumer is the party who provides the capital to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal report belongs to them.

Fact: The document is, in fact, legally owned by the lending company - unless the lender "relinquishes its interest" in the document. However, home buyers have to be given a copy of the appraisal upon written request, due to the Equal Credit Opportunity Act.

Myth: There's no reason for home buyers to even worry about what the appraisal report contains so long as their lending institution is satisfied.

Fact: It is almost imperative for consumers to go through a copy of their report so that they can verify the accuracy of the report, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make. There is an incredible amount of data stored in an appraisal report that should 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 proximity.