Appraisal myths & facts

It is required by legal agencies that an appraiser needs to be state-licensed to produce appraisal reports for federally-related real estate purchases in Texas. Also by law, you are entitled to receive a copy of the completed appraisal from your lending agency. Contact our professional staff if you have any concerns about the appraisal process.

Myth: Assessed value should always be equal to market value.

Fact: While most states support the concept that assessed value is the same as estimated market value, this usually is not the case. Usually when interior remodeling has been done and the assessor is unaware of the improvement or properties in the area have not been reassessed for a good length of time, it may vary wildly.

Myth: The appraised value of a house will differ depending upon whether the appraisal is produced for the buyer or the seller.

Fact: There is no real interest on the part of the appraiser in the result of the report, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is created.

Myth: Market value should be the same as replacement cost.

Fact: Market value is found by what a willing buyer would likely pay a willing seller for a certain house, with neither being under duress to buy or sell. If the house were rebuilt, the dollar amount needed to do so would make up the replacement cost.

Myth: Appraisers use a formula, like a specific price per square foot, to come to the worth of a house.

Fact: An appraisal is an amalgamation of data concluded from the property's size, location, proximity to specific facilities, the condition of the house and the worth of recent comparable sales. You can rely on Paradigm Appraisal Group, Inc's staff to be forthright in assessing this data.

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

Fact: Any value at which an appraiser concludes in regards to a certain property is always individualized, based on certain factors derived from the data of comparable houses and other considerations within the property itself. It makes no difference whether the economy is robust or on the decline.

Myth: Just examining what the house looks like on its exterior gives an idea of its cost.

Fact: Property value is determined by a multitude of variables, including location, condition, improvements, amenities, and market trends. As you can see, none of these variables can be found simply by examining the property from the outside.

Myth: Considering that the consumer is the person who puts up the money to pay for the appraisal when applying for a loan for any real estate transaction, by law the appraisal belongs to them.

Fact: The document is, in fact, legally owned by the lending company - unless the lender "releases its interest" in the report. Home buyers must be provided with a copy of the appraisal report through request as per the Equal Credit Opportunity Act.

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

Fact: It is almost imperative for consumers to read a copy of their appraisal report so that they can double-check the accuracy of the document, 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 information stored in an appraisal that will probably 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 vicinity.