Appraisal 101 Part 3:  Why Do I Need An Appraisal?

School is in session.


In this blog post – which is the final installment of our three-part series called ‘Appraisal 101’, we will be identifying the many reasons why you may need an appraisal.


In case you missed part one or two, click here for part one and here for part two to learn the basics of the terms appraisal, appraiser, and market value.


Most homeowners have contact with an appraiser only when they sell their home or refinance their mortgage.  The appraiser comes at the request of the purchaser’s financial institution to provide an opinion of value of the property.  For many homeowners, this is the only time they’ll see an appraiser, so they think that’s all we do. That’s completely understandable!  Below is a list (with a brief explanation) of reasons why homeowners need appraisals – not counting the typical sale / refinance appraisal.  And here we go!


  1. For the homeowners who decide to take the non-traditional route of selling their home by owner, everything falls on their own shoulders.  Pricing your home correctly is the first – and most important – step in this process.  An appraiser can help you determine the fair market value of your home, and also how long it might take for your home to sell, and we won’t ask for 6% when your home sells.
  2. This week, I got a referral from a Realtor who had a cash buyer for one of her listings.  I was very thankful because we love referrals!  The cash buyer wasn’t getting a loan, so an appraisal wasn’t required; however, the buyer realized the importance of getting an appraisal.  She wanted to make sure she wasn’t paying too much; she needed to know she was making a good investment.
  3. You just learned that the bank ran an AVM for your purchase or refinance.  An AVM is an Automated Valuation Model.  A computer program. You paid $150,000 on your largest investment, and you want to leave the valuation process up to a computer?  A computer program has no way of knowing the condition or quality of the home and must rely on (often erroneous) public records information, usually, for bedroom count, living area, etc, as the basis for its calculations.  Nothing can replace an appraiser’s eyeballs on a house, so even if the bank tells you they’ve completed an AVM and you don’t need an appraisal, you can still contact an appraiser on your own, and get an independent and unbiased opinion of value.
  4. Unfortunately, married couples sometimes find themselves facing a divorce.  While the divorce settlement can take on many forms, the most common scenario we see is when both parties divide assets based on an appraisal.  Sometimes the parties agree that only one appraisal is needed, while other times, an appraiser is hired by attorneys for both parties. An accurate appraisal can provide you with an estimate of value at the time you were married, and also an estimate of value at the time of dissolution.
  5. Following the death of a loved one, oftentimes a current estimate of market value is required for any real estate they owned.  It could be for the courts to help settle the estate, for inheritance purposes, or because the estate is selling the home and needs an estimate of value.  An appraiser is the only professional who can present the family (or courts) with an objective and unbiased opinion of market value.

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The point of this blog post is not to dive deep into any of these reasons why homeowners might need appraisals.  We’ll do that later. What I wanted to do is increase awareness of the many times when an appraisal is needed or is the best option for valuing real estate.


If you find yourself in any of these situations, give a real estate appraiser a call!  Hiring an appraiser is an investment you can’t afford not to make.



Helping homeowners navigate the appraisal process,


Ryan Bays, SRA, AI-RRS

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