An appraisal is a valuation tool used to verify a property’s value. The mortgage industry relies upon a qualified independent real estate appraiser to guide them in their financing decisions. But this is not the only reason to get an appraisal. Many homeowners, attorneys, builders, buyers and sellers utilize appraisals for a variety of needs:

Before selling your house

When it comes time to sell your property some times it is better to get the opinion of a real estate appraiser that has no financial gain in the transaction of your home being sold. Your home may be unique to your market area, for example the largest or smallest home. By enlisting a certified real estate appraiser you will get a non-bias opinion of value to help aid in determining a fair sales price for your home.

Refinancing your home

When you refinance your home, you’re actually replacing your old mortgage with a new one because your home’s value may have changed since you first bought it. For that reason, lenders will require an appraisal to ensure the new mortgage amount can be justified by what the house is worth today. If the home’s value has increased since it was purchased, you may be able to get cash out as part of refinancing. However, if it has declined, you may have difficulty securing a new loan.

Getting a home equity loan

Unlike refinancing, home equity loans are a second loan on top of the existing mortgage. The amount you can borrow in a home equity loan is based largely on the amount of equity you have after the remaining value of the mortgage is subtracted from the current value of the house. If your home has decreased in value, you may not be eligible for a home equity loan.

Applying for other loans

Other types of loans, including cash and business loans, may require you to use your home as a source of collateral. As with home equity loans, the bank will want to make sure the money it lends is supported by the current value of your property.

Appealing tax assessments

In many states, property taxes are calculated based on the fair market value of your home. If the value of your home listed on your property tax bill appears too high—if housing prices in your neighborhood or city have declined, for example—you may be able to appeal the assessment.

An independent appraisal could help strengthen your case, which ultimately could lower your annual property tax. The process for challenging assessments varies by state and locality, so be sure to check whether your state or locality allows homeowners to submit their own appraisals when appealing property tax assessments.

Bankruptcy

An appraisal may be needed when one is going through bankruptcy proceedings as an aid in determining the equity in a property.

Estate Planning

In times of loss, it is often difficult to think of the various steps that must be taken to resolve any outstanding monies of the deceased. An appraisal is required to establish fair market values of any real estate properties in the estate for tax filings and any presentation to multiple heirs. The aid of an appraisal is a necessity to dispose of the estate properly.

Divorce

In unfortunate circumstances, such as divorce, appraisals are required so that both parties involved receive a fair and impartial value so that they can concentrate on more important aspects of this difficult time. An appraisal by a qualified independent professional third party is often required by state law to settle the divorce.

PMI Removal

Private Mortgage Insurance or PMI is the supplemental insurance that many lenders have to purchase when the amount being loaned is more than 80% of the value of the home (LTV loan to value). After a rise in values and/or payment to principal goes below this 80% level PMI is no longer required. 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. An appraisal is required to determine the property’s value. The cost of the appraisal is recovered in just a few months of not paying the PMI.

Property Tax Assessments

Challenging the tax assessment has become a necessity in many parts of the country. Unfortunately, most people go into the process without the proper tools. They may pull some information from the Internet to support their claims, but have no real basis for their claims. A real estate appraiser can provide the accurate answers to the question of value. An appraisal from a qualified real estate appraiser would be a step in the right direction in any dispute with your local tax assessor’s office.