When do you 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
appraisal 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-Sale 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 remodel?'' 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.
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