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When do I need an appraisal?
Every year, countless people in the United States
buy, sell or refinance their own slice of the American Dream. Most,
if not all, of these transactions include a simple line item for an
appraisal. It has become an understood and accepted part of a real
estate transaction: "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?
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
the tax assessment has become an annual ritual in many parts of the
country. 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
appraisals to lop 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 the
supplemental insurance that many lenders ask home buyers to purchase
when the amount being loaned is more than 80% of the value of the
home. Very often, this additional payment is folded into the monthly
mortgage payment and is quickly forgotten. This is unfortunate
because PMI becomes unnecessary when 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) that
requires 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 that believe they have met the 80% loan-to-value metric. For
a nominal fee, the appraiser can provide you with a statement
regarding the home value. Some will even take the next step and help
you file a challenge with your mortgage company. The costs of these
services are very often recovered in just a few months of not paying
the PMI.
Pre-Sales Decisions
Before someone decides to sell a home, there are
several decisions to be made. First and foremost: "How much should
it sell for?" But first there may be other equally important
questions to ask: "Would it be better to paint the entire house
first?" "Should I put in that third bathroom?" "Should I complete my
kitchen renovation?" Many things which we do to our houses
have an effect on their value. Unfortunately, not all of them have
an equal effect. While a kitchen remodel may improve the appeal of a
home, it may not add nearly enough to the value to justify the
expense.
Appraisers can step in and help make these
decisions. Unlike a Realtor, an appraiser has no vested interest in
what amount the house sells for. His fee is based on his efforts,
not a percentage of the sales price. So seeking a professional
appraisal can often help homeowners make the best decisions on
investing in their homes and setting a fair sales price.
Estate Planning, Liquidation or Divorce
The loss of a loved one is a difficult time in
life. Likewise, a divorce can be a particularly traumatic
experience. Sadly, these events are often complicated by difficult
decisions regarding the disposition of an estate. Unlike many
wealthy individuals, the majority of Americans do not have dedicated
estate planners or executors to handle these issues. Also, in most
cases, a home or other real property makes up a disproportionate
share of the total estate value.
Here too, an appraiser can help. Often the first
step in fairly disposing of an estate is to understand its true
value. Where property is involved, the appraiser can help determine
the true value. At this point, equitable arrangements can more
easily be arrived at among disputing parties. Everyone walks away
knowing they've received a fair deal.
There are other uses for real estate appraisals.
The highly-trained individuals behind these services are always
looking for ways to put their expertise to work for home owners and
the people who support them. Do you need an
appraisal? Contact us today! |
