Why get an Appraisal?
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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