Appraisal 101: When Is A Property
Appraisal Needed And How Will It
If you are looking to buy or sell any real property, you have likely heard the term "appraisal" discussed. In short, a property appraisal is an objective valuation. An appraiser will come out to your residential home, commercial building, or farmland and estimate its value. There is a standard process through which this happens. The person will come out, roughly inspect the property, and compare it against known sales. Of course, your land and building won't look quite the same, so an appraiser takes this into account by adding or subtracting value when necessary. The result is an objective evaluation of how much your property is worth.
While the theory behind an appraisal is relatively straightforward, the reality is a little more nuanced. Specifically, there are sometimes questions about when and why this assessment is needed and also what impact it will have.
When and Why Would I Need an Appraisal?
You need an appraisal whenever you need to know the value of the real property. A typical scenario in which you need this information is during the purchase of a home. As a condition of giving you a mortgage, banks almost always want to know what the underlying security that backs the loan is worth. To get this assessment, they contract with an objective third-party to give them an estimate of value. A home appraiser near you will be sent out to provide this estimate. As part of the home-buying process, you will usually have an appraisal contingency that will let you back out of the deal if the property isn't worth at least as much as your offer. If you've ever purchased a home or are buying one now, you've probably run into this appraisal type before.
Another typical reason to obtain an appraisal is an application to refinance a mortgage or for a HELOC. Much like the first deed mortgage, the bank needs to know that the underlying asset will cover the loan in the case of default. As such, they order an appraisal to make sure that your home is, indeed, worth enough.
Typically, in all the above cases, the bank is the one that orders the appraisal. You will see a copy of the report, but the appraiser will not be working for you - they will be working for the bank. If you want, you can always get a second, utterly unbiased opinion by ordering an appraisal yourself. A home, commercial property, or farm is a substantial investment, and having two independent verifications of its value doesn't hurt.
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However, that's not the only time an assessment like this is required. Other legal processes, such as divorce and dissolution of a business, require an appraisal. For example, in the case of divorce, a court might need to know the value of the couple's former home to divide that asset fairly. In this case, the court would order an appraisal to get a good idea of how much the home would likely fetch on the open market.
You may also need to order an appraisal for less common circumstances. If you are gifting real property, for example, you might need to know what the value of that gift is for tax purposes. A home appraiser can answer that question for you. If you want an accurate property value for the balance sheet of your corporation or farm, again, your appraiser can assist with that. Finally, if you believe your county has valued your property too high and you're paying too much in property tax, an appraisal is useful evidence that their valuation is wrong. Of course, each county and state have different rules regarding this, so you would need to check the regulations for your particular jurisdiction.
In short, you need to have an appraisal done whenever you need to know the actual value of your real property. Sometimes the law or the bank will require one, but other times it's merely for peace of mind. Still other times, it's for information gathering to know what to set the selling price as. Property is likely the most expensive thing you will buy or sell. Having a comprehensive, unbiased opinion on its real value is typically a great idea!
How Will An Appraisal Impact Me?
Knowing the value of your property can have some significant implications, positive or negative, depending on your particular circumstance.
If you are trying to buy a home and the appraisal meets or exceeds the offer price, you're good to go. If it doesn't, you will need to make up the difference by putting more money down, or you will need to walk away from the transaction. For that reason, having an accurate assessment of the home's value done by a talented home appraiser is incredibly critical.
For other situations, like divorce or dissolution of a business, having the right valuation has a significant impact as well. It can determine how much you need to give your ex-spouse or how much a court will award you for your share of the business.
Spurgeon Appraisals Gives You All The Information You Need
As we have already seen, knowing the real value of your property is incredibly useful. At Spurgeon Appraisals, we pride ourselves on accurate results and impeccable customer service. Financial institutions trust us, and we have received compliments for our Farmer Mac experience. We provide thorough, detailed reports to ensure all our clients have a comprehensive and clear understanding of why their property valuation is what it is.
We service multiple counties within the Missouri, Illinois, and Iowa states for house appraisals. Farm appraisals have a similar coverage area, but we service more counties, such as Saline county, for these types of evaluations. We can do commercial appraisals anywhere within these three states.
No matter what you want an appraisal for, consider letting Spurgeon Appraisals give you an honest estimate of what your property is worth. With friendly customer service and a wealth of knowledge, we'll make sure the process is as quick and easy as possible. If you live in MO, IL, or IA, we're also likely the best home appraiser near you.
Feel free to email us at firstname.lastname@example.org or call us at 573-769-7779. We'll be happy to discuss your particular project with you and ensure you have your appraisal done promptly and professionally!
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