Homeowner / Buyer Page
What is an appraisal?
A real estate appraisal is an opinion of value supported by facts. It is both art and science as it has objective and subjective elements. Many homeowners believe that an appraiser’s primary duty is to find defects in the property’s improvements. Although the appraiser will make note of readily observable defects and take them into account in estimating the property’s value, this is primarily the domain of the home inspector. A home inspector will usually spend 2-3 hours at each property exclusively looking for defects. A real estate appraiser will usually spend 1/2 hour to 1 hour at each property. The vast majority of the appraiser’s time is spent at the office; researching, analyzing and writing. The finished report can be thought of as an opinion of value supported by facts.
There are several reasons appraisals are ordered by parties other than lenders:
Divorce and Estate
In the unfortunate circumstance that property is being divided or sold due to a divorce or death in the family, it is wise to obtain appraisals from more than one source to protect your interests.
Real Estate Listings
If you are considering listing your real property for sale, obtaining an appraisal from a professional is a good idea. While many realtors are capable of giving you an accurate and unbiased estimate (what they call a comparable market analysis) of your property’s value, a state certified real estate appraiser has much more experience and training in the valuation of real property. We will provide you with a report that gives an unbiased estimate of value as we have no financial interest (as some realtors do) in estimating your value too high or too low. The real estate appraisal report is a legal document. The appraiser is subject to stringent state and federal requirements in preparing your report. Violations of these requirements can result in penalties ranging from remedial education to suspension of license to incarceration.
Eminent Domain and Real Estate Taxes
Government entities have the right to obtain your property if it is in the way of proposed road construction or other public services. If you believe that the amount offered to you for your property is unfair, an appraisal from an independent source can help you to appeal the government’s estimate of your property’s value.
Real estate taxes are determined from assessments made by county workers. In most cases, the assessments are at or below fair market value. In some cases, however, we have seen estimates that are too high based on your property’s current condition or errors in the assessor’s data (For example, we have inspected properties where the assessor’s data is more than 80% off on below grade area). In Spokane County, assessors physically inspect the exterior (only) of each property every 6 years. The huge job of assessing the value of thousands of properties is accomplished by the use of the “Mass Appraisal” technique. Appraisals done by this technique are frequently inaccurate, due to their cursory nature.
Buyer’s and Seller’s rights
Many buyers and sellers contact our company when a sale is imminent. Each party wants to make sure that it is getting a fair deal before settling on a sale price.
Private Mortgage Insurance Removal
Private Mortgage Insurance is required for many types of loans when the borrower’s down payment (or equity – in the case of a refinance) is less than 20% of the property’s value. The private mortgage insurance protects the lender in the event that the homeowner defaults on the loan. When the homeowner’s equity exceeds 20%, he is eligible to have the private mortgage insurance removed, but he must initiate the process. If you have made significant improvements to your property, paid down a portion of your mortgage or realized significant market appreciation on your property (for example – if you live in Spokane and bought your property in the early 1990s you probably have realized significant appreciation since the time of purchase), you may be eligible to have your private mortgage insurance removed. The current market value of your property must be established for your mortgage company to consider removing your private mortgage insurance.
Please contact us if you have any further questions.