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Buying, Selling, Financing or Refinancing a Property
Every year, countless people in the United States buy, sell, finance or refinance a property. Most often these transactions include a single line item for an appraisal. The appraisal has become an accepted and essential part of a real estate transaction. The appraisal assures the buyer, seller, and lender as to the reasonable value of the property.
Here are other situations when the services of a certified, licensed, independent real estate professional are appropriate if not necessary:
Property Tax Challenges
Nearly every participant in a real estate transaction has a different opinion of what a property is worth. But it's the tax assessor that inevitably tips 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 unprepared. They may pull some information together (perhaps from the internet) to support their claims, but have no real supporting documentation. ''It wasn't worth that much last year'' won't work in a property tax challenge.
A real estate appraiser can provide compelling documentation to support property tax challenges. While it may not be cost effective to commission a full appraisal 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 considerable weight with an appeals board.
PMI Removal
Private Mortgage Insurance or PMI is the supplemental insurance conventional lenders ask home buyers to purchase when the amount being loaned exceeds 80% of the value of the home. Very often, this additional cost is included in the monthly mortgage payment and quickly overlooked. The fact is PMI becomes unnecessary when the remaining balance of the loan falls below 80% loan-to-value, whether through market appreciation or principal paydown. In 1998 the United States Congress passed the Homeowners Protection Act of 1998 requiring 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 who 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 often recovered with just a few months' savings on the lower mortgage payments.
Pre-Sale Decisions
Before a homeowner decides to sell there are several decisions to be made. First is ''What should be the asking price?'' But other equally important questions need to be asked include: ''Should the entire house be painted?''; ''Should that third bathroom be added?'' ''Should the kitchen be remodel?'' Many "improvements" can justify profound increases in value and/or marketability of a property. Not all improvements will have equal effects. 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 assist in making these decisions. Unlike a Realtor, an appraiser has no vested interest in the asking price. Appraisal fees are based on efforts, not on 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 also be a traumatic experience. Sadly, these events are often complicated by difficult decisions regarding the disposition of an estate. The majority of Americans do not have personal estate planners, executors, or expensive legal counsel to handle these issues. Also, in most cases, a home or other real property makes up a disproportionate large share of the total estate value.
Here too, an appraiser can benefit the process. Often the first step in fairly disposing of an estate is to establish its true value. Whenever property is involved, the appraiser can help determine the true value. At this point, equitable arrangements can more easily be arrived between disputing parties. Everyone wins in an equitable settlement.
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