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-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.