When Should You Get an Appraisal?

Besides satisfying your curiosity, knowing your home’s value can come in handy whether you’re selling, refinancing, or managing your taxes. A home appraisal is an unbiased evaluation to determine your home’s market value.

Engaging in a For Sale By Owner

I cannot urge you strongly enough to hire a Realtor when buying or selling property because Realtors have a fiduciary responsibility to you—they put your needs above their own and they can save you both time and money. However, if you decide to go it alone, you’ll need to know how your property stacks up against others of similar size, style, and location if you are to determine the right price tag.

You can hire an appraiser to evaluate your property, and they will do so by comparing your property to others that have sold in the recent past. As long as the real estate market remains relatively stable, an appraisal provides useful information.

One of the reasons I recommend hiring a Realtor is because they are aware of up-to-the-minute market information—they can appraise your home’s value based on the changing market. An appraiser usually depends on information from the past (properties that have already sold).

Plus, appraisers charge for their work, usually in the ballpark of $400-750 per appraisal, and they expect to be paid in return for their report. Realtors, on the other hand, often include their analysis as part of their listing service and your Realtor only gets paid if and when your property sells.

Justifying the price of an unusual home                                                                   

One of the times an appraiser is the perfect person to hire is when you need to determine the value of a highly unusual property. The more unusual the property, the harder it is to find close comparisons. Luckily, appraisers have access to databases that cover vast geographic locations and a wide variety of properties. If you are trying to sell a yurt on 40 acres of woodlands north of Laytonville, there probably won’t be several recent sales with similar size, style, and location.

Appraisers know how to identify and put a value on amenities that are of unique value, everything from an amazing view to the ecological benefits of yurt living, for example. A property owner’s goal is to sell their property to the person who most appreciates what they have to offer. A house with a pool has more appeal to a buyer who has a medical directive to swim every day. On the other hand, a beautiful view is not a big draw for someone who is visually impaired.

Refinancing, buy-outs, and more

Sometimes a lender may request an appraisal if the borrower wants to refinance the loan or cash out some of the equity. An appraisal is also called for if one owner wants to buy out another, as can happen in the event of a divorce or the break-up of a business partnership. One or both parties can commission an appraisal. If the difference between the two appraisals is too great, they can get a third.

Appealing a tax assessment

In case you are ever in the unfortunate position of appealing a tax assessment on your property, an appraisal is the first thing you’ll need. I know a guy who once purchased a property for $370,000 at public auction (not a foreclosure). Shortly thereafter, the county tax assessor said, in effect, “Gee, you got a bargain. I think the actual value of your newly acquired property is $1.9 million, so I’ll base your taxes on that amount.”

This didn’t seem fair, so he got an appraisal and took his case to the county appeals board. A respected appraiser said the actual value of the property was closer to $540,000. In response, the board reduced the appraised value a little.

If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.

Dick Selzer is a real estate broker who has been in the business for more than 45 years.

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