What is an Appraisal?

Real estate is considered land and anything permanently attached. A real estate appraisal, property valuation, or land valuation is the process of developing an opinion of value for real property (usually market value). Real estate transactions often require appraisals because they occur infrequently, and every property is unique (especially their location, a key factor in valuation). Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on. Oftentimes, an appraisal report is also used to set the sale price of a property.

Why Do You Need an Appraisal?

An appraisal is a valuation tool used by mortgage lenders and others to verify a property’s value for prospective financing. The mortgage industry relies upon a qualified independent real estate appraiser to help them in their financing decisions by giving their honest opinion of the value of the property in question. However, this is not the only reason to have an appraisal. Many homeowners, assessor's offices, attorneys, buyers, and sellers utilize appraisals for a variety of needs:

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). This additional payment is often folded into the monthly mortgage payment and is quickly forgotten. After a rise in values and/or payment to the principal goes below this 80% level, PMI is no longer required. 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. When this happens, an appraisal is required to determine the property's value. The costs of these services are recovered in just a few months of eliminating the PMI.

Property Tax Assessments

Challenging the tax assessment has become a necessity in many parts of the country, especially in New York State. Unfortunately, most people go into these challenges without the correct tools to grieve their assessment. They may pull some information from the internet to support their claims, but have no real evidence of data for their contentions. A real estate appraiser can provide accurate answers to the question of value. An appraisal from a qualified appraiser would be a step in the right direction in any dispute with your local tax assessor.

Estate Planning

Feasibility - Land Utilization Studies

Estate Planning

In the event of the loss of a loved one, 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 a good step to establish the fair market values of any real estate properties in the estate of the deceased for tax filings and any explanation to multiple heirs

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Divorce

Feasibility - Land Utilization Studies

Estate Planning

In unfortunate circumstances, such as divorce, appraisals are needed so that both parties involved receive a fair and impartial value of their shared real estate. This will help the parties 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.

Feasibility - Land Utilization Studies

Often, appraisers are required when townships are planning certain uses of land, rezoning, implementation of housing developments, traffic infrastructure, cost-benefit analysis, and a whole host of various projects to improve the public’s area. The appraiser’s responsibility to deliver an accurate appraisal report is a necessary response to the question of fair market value.