How does property appraisal work? (West: sales, mortgage, loans)

[lovethisarea]

This question is more out of curiosity than feeling cheated or angry.

We were surprised to know that property transaction prices are not public in Texas. In NC, anyone can lookup property transactions with prices. Without knowing previous sell prices how do appraisers appraise properties here?

When we bought our house recently the mortgage appraiser asked the builder for information on sell prices of home they had already sold on same street. That is basically asking seller to justify the price they are asking for the property.

Is this common among all property appraisers in Texas? If not what is the most reliable method of property valuation without reliable historical data?

[TurtleCreek80]

Originally Posted by lovethisarea

This question is more out of curiosity than feeling cheated or angry.

We were surprised to know that property transaction prices are not public in Texas. In NC, anyone can lookup property transactions with prices. Without knowing previous sell prices how do appraisers appraise properties here?

When we bought our house recently the mortgage appraiser asked the builder for information on sell prices of home they had already sold on same street. That is basically asking seller to justify the price they are asking for the property.

Is this common among all property appraisers in Texas? If not what is the most reliable method of property valuation without reliable historical data?

I don't know anything about new construction appraisals, but for resale, appraisers have full access to MLS where they can see they actual sales prices. Home sales prices are not public info in Texas but industry professionals (realtors, appraisers, even the ole tax man) have access to them via mls.

[FalconheadWest]

Originally Posted by lovethisarea

... what is the most reliable method of property valuation without reliable historical data?

What does it matter what someone paid for the house 2 years ago or 20 years ago? The market value is what it is worth today. The only way to know what it's worth today is to look at current sales of like properties. Texas is a non-disclosure state because we like our privacy. Past history has no bearings on current or future history. Trends can show you things, but trends still don't give you a value without comparing recently sold properties, not past prices.

[lovethisarea]

Originally Posted by TurtleCreek80

I don't know anything about new construction appraisals, but for resale, appraisers have full access to MLS where they can see they actual sales prices. Home sales prices are not public info in Texas but industry professionals (realtors, appraisers, even the ole tax man) have access to them via mls.

LOL. Now I understand why they say "Texas is business friendly".

Seriously though I think if this is true the state went too far. If the info is available, make it available to all. If if it is not meant to be public (for privacy concerns etc), don't even reveal it to pros.

[Rakin]

Builders usually only post a few homes in the MLS with sold prices. Any Appraiser worth their salt knows to call the builder for Comps.

If I bought a new construction home I would want my PRIVACY respected and not want the sales price released.

[TurtleCreek80]

Originally Posted by lovethisarea

LOL. Now I understand why they say "Texas is business friendly".

Seriously though I think if this is true the state went too far. If the info is available, make it available to all. If if it is not meant to be public (for privacy concerns etc), don't even reveal it to pros.

I don't understand your position at all. The people who NEED to know market value (i.e., realtors who are pricing new listings and appraisers who are necessary to ensure appropriate sized loans are approved) have access to this info, whereas people who WANT to know what you paid (your nosy neighbor, jealous coworker, gossipy church ladies) don't.

[JustMike77]

Originally Posted by lovethisarea

This question is more out of curiosity than feeling cheated or angry.

We were surprised to know that property transaction prices are not public in Texas. In NC, anyone can lookup property transactions with prices. Without knowing previous sell prices how do appraisers appraise properties here?

When we bought our house recently the mortgage appraiser asked the builder for information on sell prices of home they had already sold on same street. That is basically asking seller to justify the price they are asking for the property.

Is this common among all property appraisers in Texas? If not what is the most reliable method of property valuation without reliable historical data?

I'm a bit unclear, but I'm assuming that you bought a new home from the builder. IF that's the case, it is completely normal for the appraiser to visit the builder's sales office to get recent sales data for a few reasons. First, we try hard to find the most similar recent sales as possible and sales on your street built by the same builder are perfect comps. Secondly, even though I have MLS and public record data on my desktop it can take months for public records to properly record new construction sales. As for the appraiser allowing the builder to justify the sales price, this really isn't so. The appraiser will gather ALL of the sales prices which have occurred in the past 6 months. It is then up to the appraiser to reconcile these prices as far as location, lot size, view, etc to determine WHY they sold at different prices and decide which are most similar to YOUR home. He will then use those similar sales to determine the market value of your home whether it matches your sales price or not. At least, that's the way it's supposed to work.

[Wittgenstein's Ghost]

The only thing that seems wrong about the process to me is that the appraiser knows the contract price. That is not information an appraiser needs in order to determine value, and it could clearly muddy up the results.

[FalconheadWest]

Originally Posted by Wittgenstein's Ghost

The only thing that seems wrong about the process to me is that the appraiser knows the contract price. That is not information an appraiser needs in order to determine value, and it could clearly muddy up the results.

It's the law. The appraiser must have the executed contract in hand and be able to see all the terms like if the seller was paying closing costs or title policy as all those things go into the value of the contract and the property.

[Wittgenstein's Ghost]

Originally Posted by FalconheadWest

It's the law. The appraiser must have the executed contract in hand and be able to see all the terms like if the seller was paying closing costs or title policy as all those things go into the value of the contract and the property.

But the appraiser's job is simply to give the value of the property. Knowing the target could clearly affect the results. There is a reason double blind studies are used in science.

The lender can extrapolate their own conclusion about the loan based on the terms of the contract and the appraised value.