Value of 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 be real effective in these situations. While it may not be
    economical to commission a full appraisal in order 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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