A Real Estate Appraisal Finds the Market Value of a Property
The Market Value of a property is the amount it should fetch if it were offered for sale when neither the buyer nor the seller are in distressed positions.
Who Can Perform a Real Estate Appraisal in Texas?
Only licensed Texas appraisers can perform real estate appraisal in Texas.
Appraisers are licensed and regulated by the Texas Appraiser Licensing and Standards Board (TALCB).
When Is An Appraisal Necessary in Texas?
An appraisal is necessary anytime someone needs to know the market value of their home or land, or the value of property for which they are legally responsible.
- Lenders order appraisals during the mortgage application process to make sure it is worth as much as the loan amount.
- Lenders also order appraisals when a home is refinanced.
- A home owner may need an appraisal in order to get PMI removed from their mortgage.
- When someone dies, a Date of Death Appraisal is necessary to determine the value of the property.
- A divorce appraisal is usually necessary during a divorce.
- A real estate appraisal can also help lower your taxes if the tax assessors office valued your home too high on the tax rolls.
- People wanting to sell their home FSBO (For Sale by Owner) in Texas should have the home measured and appraised to make sure they have accurate information for selling their home.
Who Orders the Real Estate Appraisal?
That depends on the intended use of the appraisal.
- If the appraisal is for a loan, the lender will order the appraisal.
- If it is for a divorce, a date of death appraisal, to dispute taxes or for selling a home FBSO, the person who needs the appraisal can order one from a licensed Texas appraiser.
- A homeowner who wants to get PMI cancelled can also order an appraisal – but should speak with the mortgage holder first.
How Do I Prepare for a Real Estate Appraisal?
This short video will give you the quick list of what you need to know to prepare for a real estate appraisal.
You should also read the article on Appraisal IQ called How to Prepare for a Real Estate Appraisal.
What Happens Before the Appraiser Comes to My House?
Prior to the appraisal inspection, the appraiser will research information about the property and the neighborhood. This includes confirming that the details (lot, block, street address, etc.) are correct, which establishes that the correct property is being appraised.
What Can I expect When the Appraisers Visits My Property?
After doing his or her initial research, the appraiser will visit to perform the appraisal inspection.
This inspection will include the following basic steps:
- Measurement of the exterior and part of the interior. The calculated square footage will include all interior, conditioned space and will not include covered patios, balconies or walkways. The square footage of the garage will also be determined and reported, but is not considered to be part of the square footage of the home.
- Observation of the condition, to assess if the condition is poor, fair, good or excellent condition. This observation step will include taking photographs to document the condition. These photos will include, at a minimum, a street scene (a photograph taken looking down the street, i.e., through the neighborhood), front and rear elevations, and interior pictures of the kitchen, bathrooms, fireplace(s) and living spaces. When the appraiser is assessing the condition, he or she is checking for conditions that could affect the value.
- Verification of upgrades that have been provided to the appraiser that may support additional value.
- Notation of permanent elements or features that could affect the value. This may include built-in cabinetry, built-in appliances, built-in BBQs, and other permanent items that may not be removed. The fact that an upgrade cost a certain amount does not necessarily mean that the property value will have increased correspondingly.
- Notation of the size and condition of the basement, including whether or not the basement, or a portion of the basement has been updated or finished. Although updated basements may affect the value of a property, the basement square footage is not included in the overall square footage reported for the property. Basement value is calculated separately from the main level(s) square footage.
- Verification that the property has a furnace and that the furnace appears to be in working condition. Please note that this is not a furnace inspection of the type a home or HVAC inspector would perform. The appraiser needs to determine that the furnace turns on, not that it functions as intended, which is out of the scope of a real estate appraisal. If the furnace does not appear to be in working order, the appraiser will not that on his report and an additional furnace inspection may be required to confirm the furnace is in good working order prior to the lender making the loan.
- Confirmation of the number of rooms. A room must have a closet and a window to be counted as a bedroom.
What Does The Appraiser Do After He Leaves My Home?
After the appraisal inspection, the appraiser will use this information to compare this property to comparable (similar) properties that have recently sold (or are for sale) in the market area for your home.
He is she will analyze the available market data along with the specifics for the inspected property to make his determination of market value in the real estate appraisal report.
Who Gets a Copy of the Real Estate Appraisal?
- The lender, if the lender ordered it.
- Otherwise, the client, which is usually the owner of the real estate.