Common myths about appraising

It is required by the government that a real estate appraiser must be state-licensed to produce appraisal reports for federally-related real estate transactions in Texas. You are also entitled by law to demand a copy of the completed report from your lending agency. Contact LHC Appraisals if you have any questions about the appraisal procedure.

Myth: Market value should be equivocal to the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. Interior remodeling that the assessor is unaware of and a dearth of reassessment on nearby homes are excellent 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 cost of the house does not affect the salary of the appraiser; as a result, the appraiser has no preconceived interest in the worth of the home. This means that he will conduct business with impartiality and independence regardless for whom the appraisal is produced.

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

Fact: The way market value is arrived at is based on what a buyer would likely pay a willing seller for a home without being under duress from any outside group to buy or sell. The dollar amount demanded to rebuild a house is what forms the replacement cost.

Myth: Specific methods, like the price per square foot, are what appraisers use to ascertain the price of a home.

Fact: Appraisers make a comprehensive analysis of all factors pertaining to the cost of a property, including its location, condition, size, proximity to facilities and recent costs of comparable homes.

Myth: In a powerful economy - when the values of houses in a given region are found to be appreciating by a particular percentage - the costs of individual properties in the proximity can be expected to rise by that same percentage.

Fact: Any cost at which an appraiser concludes concerning a certain house is always individualized, based on certain factors found from the information of comparable houses and other specifications within the house itself. This is true in fair economic times as well as bad.

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Myth: Just examining what the home looks like on the outside gives a good idea of its worth.

Fact: House worth is concluded by a number of variables, including location, condition, improvements, amenities, and market trends. As you can see, none of these factors can be found simply by inspecting the house from the outside.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they legally own their appraisal report.

Fact: Unless a lending agency releases its interest in the report, it is legally owned by the lending company that purchased the appraisal. Due the Equal Credit Opportunity Act, any home buyer demanding a copy of the appraisal report must be given it by their lender.

Myth: Home buyers need not be concerned with what is in their appraisal so long as it exceeds the requirements of their lending institution.

Fact: Only if consumers check out a copy of their appraisal 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. There is a great deal of information stored in an appraisal that will probably be useful to the consumer 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 area.

Myth: The only reason someone would hire an appraiser is if a house needs its cost estimated in a lender sales transaction.

Fact: Appraisers can have many different qualifications and designations which allow them to perform a lot of different services including - but certainly not limited to - advice on estate planning, tax assessment, zoning, dispute resolution in many different legal situations and cost analysis.

Myth: A property inspection serves the same purpose as an appraisal.

Fact: A home inspection serves a completely different purpose than an appraisal report. The point of an appraisal report is to form an opinion of fair market value during the appraisal process and the production of the appraisal. House inspectors will write a report that will express the condition of the property and its major components and possible damage.

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