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When do you need an Appraisal
Are you in the process of buying, selling or refinancing a piece of property? Typically, these transactions include a simple line item for an appraisal. An appraisal assists in determining property value. ''Let's bring in the expert and make sure we're not spending too much on this property.''
But is this the only reason to get an appraisal? Are there other times when the services of a certified, licensed, independent real estate professional might come in handy?
Pre-Sale Decisions
Before someone decides to sell a home, there are several questions to ask. First and foremost: ''How much should it sell for?'' Other equally important questions include: ''Would it be better to paint the entire house first?'' ''Should I put in that third bathroom?'' ''Should I complete my kitchen remodel?'' Modifications to our houses have an affect on their value, and not all changes are equal. While a kitchen remodel improves the appeal of a home, it may not add enough to the value to justify the expense.
Appraisers can step in and help answer your questions. Unlike a Realtor, an appraiser has no vested interest in the sale price of your home. An appraiser's fee is based on his efforts, and not a percentage of the sales price. Seeking a professional appraisal helps homeowners make educated decisions about investing in their homes and setting a fair sales price.
Property Tax Challenges
It's a running joke that every one has a different perspective of what a house is worth. And it's the tax assessor that seems to always come in at the high end of the scale! Challenging a tax assessment can be a battle. Unfortunately, most people go into these challenges unarmed. They may pull some information from the internet to support their claims, but have no real basis other than: ''It wasn't worth that much last year.''
A real estate appraiser can help in these situations. While it may not be economical to commission a full appraisal to cut a few hundred off your tax bill, often an appraiser can do a limited appraisal or neighborhood analysis for much less. These documents can carry a lot of weight when you appear before an appeals board.
PMI Removal
Private Mortgage Insurance, or PMI, is supplemental insurance that lenders may ask home buyers to purchase when the loan amount is more than 80% of the value of the home. Oftentimes, the PMI payment is folded into the monthly mortgage payment and is quickly forgotten. However, the PMI is unnecessary once the remaining balance of the loan - whether through market appreciation or principal paydown - dips below this 80% level. In fact, the United States Congress passed a law in 1998 (the Homeowners Protection Act of 1998) requiring lenders to remove the PMI payments when the loan-to-value ratio conditions have been met.
Many appraisers offer a specific service for home owners who believe they have met the 80% loan-to-value metric. Appraisers can provide you with a statement regarding the home value. Some will also help you file a challenge with your mortgage company. The costs of these appraisal services are often recovered in just a few months of not paying the PMI.
Estate Planning, Liquidation or Divorce
The loss of a loved one is a difficult time in life. Likewise, a divorce can be a traumatic experience. Sadly, these events are often complicated by difficult decisions regarding the disposition of an estate. In most cases, a home or piece of property makes up a disproportionate share of the total estate value.
Here too, an appraiser can help. To fairly dispose of an estate is to understand its true value. When property is involved, an appraiser can help determine the true property value. With an appraisal, a settlement for disposing of property can more easily be arrived at among disputing parties. Everyone walks away knowing they've received a fair deal.
Real estate appraisals serve many purposes. Appraisers are always looking for ways to put their expertise to work for you!
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