Do
I need an Appraisal?
There many times when an appraisal may be needed:
Selling
your home. If you have a property, knowing the current market value
can help you negotiate a sale more quickly. If you've done any renovations,
an appraisal will reflect the increased value of your home, justifying
a higher selling price. An appraisal is a must if you're relocating
and need to sell quickly but at a fair price.
Buying a new home. When you've found the house you want, you can
avoid paying too much by getting an appraisal to determine its current
market value.
Buying real estate insurance. Property values have risen dramatically
over the last decade. To make sure you purchase sufficient insurance
coverage, it's a good idea to get an appraisal to establish the current
market value of your property.
Filing an insurance claim. When filing for a casualty loss, an
appraisal provides a no-quibble way to determine property replacement
costs. Applying
for a home equity loan. To get a loan you need to know the amount
of equity you have in your home. An appraisal can establish that for
you.
Property
Tax Assistance. Your property taxes are based on the assessed value
of your home. An appraisal can help you challenge your taxes by showing
that your assessment is too high.
Refinancing.
If you decide to refinance, an appraisal can establish the market value
of your property and that will determine the amount of your new mortgage.
Removing
Private Mortgage Insurance (PMI). Most lenders are willing to drop
their requirement for PMI when your home equity reaches a certain value
level. A current market value appraisal can provide the evidence necessary
to determine the equity in your home.
Bankruptcy.
An appraisal may be necessary to determine the equity of a property
in a bankruptcy proceeding.
Divorce Settlements. If the parties to a divorce can't agree
on division of the assets, the judge often requests an appraisal to
help him decide on an equitable settlement.
Probate Purposes. When a will is probated, an appraisal may
be ordered to determine the value of an estate.
How
much does an appraisal cost?
As with any profession, fees vary depending on the complexity of the
assignment, and also with the experience, education and ability of the
appraiser. Appraisals for smaller residential properties are frequently
completed using standardized forms and are the least expensive. Appraisals
for complex residential properties, for larger multi-family residential
properties, and for non-residential properties(e.g., commercial and
industrial) are usually prepared in narrative report format and the
fees for this work are higher. As a rough guideline, the average fee
for an appraisal of a single family residential property is about $350.
How
do I find a qualified appraiser?
At the very least, the appraiser you select should be licensed or certified
by the state. This will insure that the he or she has the education
and experience necessary to appraise your property. A licensed or certified
appraiser must conform to the Uniform Standards of Professional Appraisal
Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal
Foundation. A state's license and certification laws are reviewed by
the Appraisal Subcommittee, which maintains a roster of state licensed
and certified appraisers.
What
is market value?
It is the most probable price which a property would bring in an open
and competitive market when a buyer and seller create a transaction.
It is assumed that all the conditions necessary for a fair sale would
be met and the price would not be influenced by unusual circumstances.
In
practice, the market value of a residential property is typically determined
by the method of comparable sale. The property is compared to homes
which have sold within the past six months on similar terms. A good
"comparable" is a home of similar style, age, size, condition,
and quality with many of the same features. Dissimilar homes, homes
offered for sale or those still under contract are not considered.