(From my understanding, this is actually a FEMA requirement placed on all cities that are in flood prone areas. If a city refuses to adopt the ordinance then FEMA can disqualify all citizens of the city from the National Flood Insurance Program. )

The basis of the structure's market value will be taken from HCAD records but unfortunately these values are terribly inconsistent and generally inaccurate. Considering the fact that HCAD recently announced that they will be altering many homeowner's tax records to indicate a more accurate valuation of land and structure separately (See Article Here). I don't know about you, but that doesn't invite too much confidence in HCAD's original assessment in my eyes. Also take into account that many homeowners appeal their property taxes each year thus making their overall property value on tax records lower.

So what alternatives do homeowner's have in determining whether or not their repairs exceed 50% of the STRUCTURES market value? Most literature I have come across states that if you do not agree with the counties assessment then you may have a licensed real estate appraiser prepare an appraisal for the cities consideration. Unfortunately determining JUST the market value of a structure requires a very complex appraisal, one which will be very costly. When real estate appraisers determine market value of a property we almost always use what is known as the sales comparison approach. That is, we take and compare recent sales within your market area to determine a reasonable market value for you property. This approach does not make a distinction between land value and structure value since most properties sale as a whole. If there have been recent land or lot sales in your area then we can perform a standard appraisal to determine overall market value and then perform a land appraisal to determine just land value. We would subtract the land value from the overall market value to arrive at just structure value. As you can see this requires two appraisals and will naturally cost more than just a standard appraisal.

But what if there are no lot sales in your market area? In this situation we must take a different approach; we must also perform what is known as a Cost Approach Appraisal. To be accurate this approach requires a good deal of work while at the property. Using the Cost Approach we will determine what it would cost to rebuild your home and subtract any depreciation. But this doesn't give us the Market Value, it only gives us a Cost Value. We then must perform the standard appraisal to determine the entire property's Market Value. From this we subtract the Cost Value which will leave us just land value. Now we can take the remaining land value and subtract it from the Market Value to arrive at Market Value of the structure only. Whew! We of course support our conclusion of value with any available data such as scattered land sales.

The downside is that the costs for such a complex appraisal assignment is going to be very high but when compared with having to completely rebuild one's home, it might just be worth it to many homeowners.