A home appraisal can be useful for a number of reasons, not only during the course of a real estate transaction. There are many reasons for a real estate appraisal, some obvious and some not so…
Why to get a home appraisal:
- To get an independent estimate (second opinion) of market value when listing a home. Most real estate agents cannot collect, interpret and apply data like an appraiser. A “cma” is not near the level of research completed in an appraisal.
- In case of an appraisal below contract price. Agents are inadequately prepared to contest a low appraisal and many lenders will only consider an appeal that includes a second appraisal.
- To avoid the first two items; some sellers are hiring an appraiser as a consultant during the listing period. The work with the seller and meet the bank appraiser on site. They provide appropriate data that supports the contract and limits the chance of appraisal problems.
- Cash home buyers will benefit from an impartial appraisal, while one isn’t required it is a worthwhile investment for an impartial opinion of value and peace of mind.
- To remove private mortgage insurance (PMI). Mortgages with less that 20% equity often carry very expensive insurance which can add hundreds to the monthly payment.
- To challenge a high tax assessment. Tax assessments are notoriously inaccurate and do not always reflect current conditions. An appraisal is a key asset when contesting an assessment. This is especially true with the property tax caps in the last tax code change.
- Personal reasons include homes listed for sale by owner, new construction, estates, divorce, relocations, buy outs, planned updates or additions, insurance and many other reasons.
Here’s a one minute review of what an appraisal is and what to expect…
And here’s a deeper dive into how we find comparables to use and how we work with the buyer’s appraiser. It’s a 5 minute review of how we avoid appraisal issues.
Hank Miller is both an associate broker and certified appraiser. Real estate has been his full time occupation since 1989. Hank established and operated large appraisal firms in both NY and GA and spent several years as the SE review appraiser for one of the largest private lenders in the country. He’s completed and reviewed well over 18K appraisals, has years of expert witness testimony and continues to be active in the industry. Details of Hank’s real estate experience can be seen here.