Appraisal myths debunked
It is required by law that an appraiser must be state-licensed to offer appraisal reports for federally-supported property transactions in Texas. You are also entitled by law to receive a copy of the completed appraisal report from your lender. Contact LHC Appraisals if you have any concerns about the appraisal procedure.
Myth: The value that is ascertained by the appraiser will be equivalent to the market value.
Fact: It might be that Texas, like most states, supports the suggestion 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 has not seen the improvements, or when houses in the area have not been reassessed for an prolonged period of time.
Myth: Depending on whether the appraisal is written for the buyer or the seller, the cost of the property will vary.
Fact: The price of the property does not affect the salary of the appraiser; as such, the appraiser has no pressured interest in the opinion of value of the property. This means that he will conduct services with impartiality and objectivity regardless for whom the appraisal is produced.
Myth: Market value should equate to replacement cost.
Fact: Without any influence from any different parties to buy or sell, market value is what a willing buyer would pay an interested seller for a specific property. Replacement value is the dollar amount necessary to rebuild a house in-kind.
Myth: Appraisers use a formula, such as a specific price per square foot, to arrive at the value of a home.
Fact: There are many different calculations that an appraiser will use to make a full analysis of every factor pertaining to the home, such as the size, location, condition, how close it is to specific facilities and the worth of recently sold comparable homes.
Myth: In a powerful economy - when the prices of properties in a given county are reported to be rising by a particular percentage - the costs of individual houses in the vicinity can be expected to increase by that same percentage.
Fact: All appreciation of value is on a one-on-one basis, determined by information on relevant conditions and the data of comparable houses. It doesn't matter if the economy is doing well or declining.
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Myth: Just looking at what the house looks like on its exterior gives a good idea of its worth.
Fact: There are a number of different factors that conclude the value of a home; these factors include area, condition, improvements, amenities, and market trends. An external inspection definitely can't provide all of the data needed.
Myth: Since you're the one funding for the appraisal report when applying for the loan to purchase or refinance your home, you own the produced appraisal.
Fact: The appraisal is, in fact, legally owned by the lending agency - unless the lender "releases its interest" in the report. However, home buyers have to be given a copy of the report upon written request, through the Equal Credit Opportunity Act.
Myth: Home buyers need not be concerned with what is in their appraisal so long as it meets the requirements of their lending institution.
Fact: Only if consumers examine a copy of their report can they verify 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, comprised of useful and often-revealing 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 area.
Myth: Appraisals are ordered only to estimate building values in home sales involving mortgage-lending deals.
Fact: Based upon their qualifications and designations, appraisers can and will perform a lot of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: A home inspection serves the same purpose as an appraisal.
Fact: A home inspection has a completely different purpose than an appraisal report. The appraiser decides upon an opinion of value in the appraisal process and resulting appraisal report. A home inspector analyzes the condition of the building and its main components and reports these findings.
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