Every year, countless people in the United States buy, sell or refinance their own home. Most of these transactions include a line item for a home appraisal. It has become an basic requirement of a real estate transaction. ''Let an expert in the area make sure we're not spending too much on this property.''
However, this the only reason to get a home appraisal? Are there other times when the services of a certified, licensed, independent real estate professional are helpful?
PROPERTY TAX CHALLENGES
Every one has a different perspective of what a house is worth. The tax assessor is a good example and seems to always come in at the high end of the scale! Challenging the tax assessment has become an annual ritual in many of the metro counties. Unfortunately, most people go into these challenges unprepared. They may pull some information from the internet to support their claims, but have no real basis to support their claim of the true value of the property last year.'
A real estate appraiser can help in these situations. A full home appraisal or a desktop review can carry a lot of weight when you appear before an appeals board.
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 - drops 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 home appraisers offer a specific service for home owners that believe they have met the 80% loan-to-value metric. For a nominal fee, the home 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.
Before someone decides to sell a home, there are several decisions to be made. First and foremost: ''How much should it be listed 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.
Home appraisers can step in and help make these decisions. Unlike a Realtor, a home 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 home appraisal can often help homeowners make the best decisions on investing in their homes and setting a sales price that can be supported.
ESTATE PLANNING, LIQUIDATION OR DIVORCE
The loss of a loved one is a difficult time in life. Similarly, a divorce can be a particularly difficult experience. These events can often be complicated by difficult decisions regarding the estate disposition. 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.
A home appraiser can help in these situations. Often the first step in the disposing of an estate is to understand its true market value. Where property is involved, the home appraiser can help determine the current value. With a professional home appraisal completed an agreed upon arrangements can more easily be arrived at among disputing parties. Everyone feels better 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.