Every year, millions of people in the United States buy, sell or refinance their own slice of the American Dream. Bringing in "the expert" has become an understood and accepted part of a real estate transaction. Many people say: "Let's make sure we're not paying too much for this property."
But is this the only reason to get an appraisal? Absolutely not! The following examples explain situations when the services of a certified, licensed, independent real estate professional might come in handy.
EXAMPLE #1: PURCHASING A HOME
One of the most important issues involved in purchasing a property is developing an opinion of what it's worth so that you can make an informed offer. A professional appraisal report performed by a qualified, state-certified appraiser can provide you with an objective, third party opinion of a property's current Market Value. And for the small price of this service, you can give yourself "peace of mind" (prior to making an offer to purchase) that you're offering a fair price for the property.
EXAMPLE #2: REMOVAL OF PMI
PMI or Private Mortgage Insurance 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. Many times, this additional payment is included in 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 - goes 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.
EXAMPLE #3: REFINANCE OR HOME EQUITY LOAN
Whether you need to consolidate bills, have a college tuition to pay, are adding a swimming pool, or just want to tap into the equity of your home, you'll need a new loan. Many times this requires a new appraisal of the property.
EXAMPLE #4: RELOCATION
Our company understands the stress involved with an employee relocation. Our appraisers take great care in establishing a convenient appointment time for the appraisal inspection. We encourage relocating employees to provide input on the positive attributes of their property along with information about any recent sales or listings in their neighborhood that they want considered.
EXAMPLE #5: SELLING YOUR HOME
Whether you choose to sell your home on your own or use the assistance of a realtor, a professional appraisal can help you make a better decision when determining your selling price.
An appraiser has no vested interest in what amount the house sells for (unlike a real estate agent). Appraiser fees are based on completion of the appraisal report and not a percentage of the sales price. Having a professional appraisal can often help homeowners make the best decisions on investing in their homes and setting a fair sales price.
EXAMPLE #6: ESTATE LIQUIDATION
The loss of a loved one is a difficult time in life. Settling an estate from a death, or probate, often requires an appraisal to establish Fair Market Value for the residential property involved. The ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP) binds us with confidentiality, ensuring the fullest degree of discretion.
The majority of Americans do not have dedicated estate planners or executors to handle these issues. In most cases, a home or other real property makes up a disproportionate share of the total estate value.
In this situation, our appraisers can help! 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 made among disputing parties. Everyone feels confident they've received a fair deal.
EXAMPLE #7: HOME IMPROVEMENTS (TO ADD VALUE)
Before you decide to sell your home, there are several decisions to be made. You may ask...: "What price should it sell for?" "Would it be better to paint the house before we sell it?", "Should I put in that third bathroom?", "Should I remodel the kitchen?" 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.
EXAMPLE #8: DIVORCE SETTLEMENT
A divorce can be a traumatic experience for both parties and is often further complicated by the difficult decision of "Who gets the house?". In most divorce cases, the Court may order the sale of the home so each party gets an equal share of the equity. Therefore, it's a good idea to order an appraisal so both parties are fully aware of what the true market value is.
For a nominal fee, a professional appraisal report will provide the mortgage company a statement regarding your home's value. The cost of the appraisal fee is very often recovered in just a few months of not paying the PMI.
If the parties want to sell the home, they'll have a better idea of what price to set. And on the flipside, if a "buyout" is the chosen option, both parties will feel like they've gotten a fair assessment.