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Why get 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-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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