About Appraisers and Appraisals
Appraisers are licensed by individual states after completing coursework
and internship hours that familiarize them with their real estate
markets. The lender might use an appraiser on its staff, or contract
with an independent appraiser.
If you are allowed to choose the appraiser, and it isn't someone
the lender is familiar with, the results might be subject to review
before they are accepted. The appraiser should be an objective third
party, someone who has no financial or other connection to any person
involved in the transaction.
When do you need 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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