Appraisal myths debunked
It is mandated by law that a real estate appraiser needs to be state-licensed to produce appraisal reports for federally-supported real estate sales in Texas. Also by law, you are entitled to receive a copy of the finished appraisal report from your lender. Contact us if you have any questions about the appraisal process.
Myth: Market value will always be equivocal to the assessed value of the property.
Fact: This is not often the case; most states do support the suggestion that the assessed value is the same as market value, but not always. Generally when interior remodeling has occurred and the assessor is has not investigated the improvement or properties in the area have not been reassessed for quite some time, it may vary wildly.
Myth: Depending on if the appraisal is produced for the buyer or the seller, the appraised value of the house will vary.
Fact: The opinion of value of the property does not affect the pay of the appraiser; due to this, the appraiser has no vested interest in the worth of the property. Obviously, he will conduct business with impartiality and objectivity regardless for whom the appraisal is produced.
Myth: Market value will equal replacement cost.
Fact: The way market value is derived is based on what a buyer would likely pay a willing seller for a house without being under duress from any outside party to buy or sell. The dollar amount necessary to reconstruct a house is what shows the replacement cost.
Myth: There are certain ways that appraisers use to show the value of a home, like the price per square foot.
Fact: There are many different processes that an appraiser will use to make a full analysis 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: When the economy is doing well and the cost of houses are reported to be increasing by a certain percentage, the other homes in the neighborhood can be expected to increase based on that same percentage.
Fact: All appreciation of value is on a one-on-one basis, found by information on relevant conditions and the data of comparable homes. It makes no difference if the economy is excellent or poor.
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Myth: Just looking at what the home looks like on its exterior gives an idea of its cost.
Fact: There are a number of different variables that show property value; these factors include area, condition, improvements, amenities, and market trends. There's no real way to get all of this data from just examining the home from the outside.
Myth: Since the consumer is the one who provides the funding to pay for the appraisal when applying for a loan for any real estate transaction, legally the appraisal belongs to them.
Fact: Legally, the document is owned by the lending agency unless the lender releases their interest in the document. Due the Equal Credit Opportunity Act, any consumer asking for a copy of the report must be given one by their lender.
Myth: Consumers need not be concerned with what is in their document so long as it meets the needs of their lending company.
Fact: Only if consumers look through 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 report makes an excellent record for future reference, filled with helpful 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.
Myth: The only reason someone would order an appraisal is if a home needs its worth assessed in a lender sales transaction.
Fact: Depending upon their qualifications and designations, appraisers can and often do perform a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection.
Fact: A home inspection has a completely different purpose than an appraisal report. An appraiser forms an opinion of value in the appraisal process and resulting report. A home inspector analyzes the condition of the building and its major components and reports their findings.
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