Should You Get a Home Appraisal Before the End of the Year?
As the end of the year approaches, many homeowners begin thinking about finances, taxes, estate planning, investments, and plans for the year ahead.
One thing that may not immediately come to mind? Knowing what your home or property is actually worth.
While many people associate appraisals with buying a home or getting a mortgage, there are several situations where ordering a private appraisal before year-end can provide valuable information for an important financial decision.
So, should you get a home appraisal before the end of the year? Here are a few situations where it may make sense.
1. You're Planning to Sell Your Home
If you're considering selling in the coming months, an appraisal can give you an independent opinion of your property's market value before you make any major decisions.
This can be especially useful if you're considering a private or off-market sale, where you may not have the benefit of exposing the property to the open market before agreeing on a price.
An appraisal can help you better understand where your property stands based on its characteristics, recent comparable sales, and current market conditions.
2. You're Reviewing Your Estate Plan
The end of the year is a common time for families to review financial and estate-planning documents.
Real estate can represent a significant portion of someone's overall assets, so understanding its value may be important when making certain estate-planning decisions.
A professional appraisal provides a documented opinion of value as of a specific date. Depending on your circumstances, your attorney, accountant, or financial advisor can help determine whether an appraisal is appropriate and what type of valuation is needed.
3. You're Handling an Estate or Inherited Property
If you've inherited a home or are helping settle an estate, determining the value of the real estate may be an important part of the process.
Estate-related appraisals can sometimes require a retrospective value, meaning the appraiser develops an opinion of what the property was worth as of a previous date rather than its value today.
For example, an appraisal may be needed to establish the property's value as of a particular date relevant to an estate.
Because estate and tax situations vary, it's important to work with the appropriate attorney or tax professional to determine the correct valuation date and requirements.
4. You're Making Year-End Financial Decisions
Your home may be one of your largest financial assets.
Knowing its approximate market value can provide useful information when reviewing your overall financial picture or considering decisions involving real estate.
For example, you may be thinking about:
Selling or transferring a property
Buying out another owner's interest
Making a real estate investment
Refinancing
Planning future renovations
Evaluating the equity you may have in a property
An appraisal doesn't make these decisions for you, but it can provide reliable information to help you make them more confidently.
5. You're Considering Removing PMI
If you've owned your home for a while—or if property values in your area have increased—you may be wondering whether you have enough equity to remove private mortgage insurance (PMI).
Depending on your loan and lender requirements, an appraisal or another lender-approved valuation may be required to determine your home's current value.
Before ordering an appraisal independently for this purpose, contact your mortgage servicer first. Your lender may have specific requirements regarding the valuation process and who can perform it.
6. You're Going Through a Divorce or Property Division
When real estate is involved in a divorce or separation, determining the value of the property can be an important part of dividing assets or evaluating a potential buyout.
An independent appraisal can provide a professionally developed opinion of value based on market evidence rather than relying solely on online estimates or either party's opinion of what the property is worth.
Depending on the circumstances, an appraisal may also need to meet specific legal requirements, so it's important to coordinate with your attorney when appropriate.
7. You Own Investment Property
Year-end is also a natural time for real estate investors to review their portfolios.
Understanding the current market value of a property can provide another piece of information when evaluating whether to hold, sell, refinance, transfer, or make additional investments.
An appraisal considers the property itself as well as relevant market data to develop an independent opinion of value.
Why Not Just Use an Online Home Estimate?
Online home-value tools can be convenient for getting a general idea of what homes in an area may be worth, but an automated estimate is not the same as a professional appraisal.
An appraiser analyzes the specific property and relevant market information. Depending on the assignment, this can include the home's condition, quality, improvements, location, site characteristics, comparable sales, market trends, and other factors that may influence value.
This becomes particularly important when a property has characteristics that aren't easily captured by an automated valuation model.
Do You Need an Appraisal Before December 31?
Not necessarily.
There isn't a general rule that homeowners need to have their homes appraised before the end of every year.
Instead, the question is whether you're approaching a financial, legal, or real estate decision where having a professionally developed opinion of value would be useful.
If you anticipate needing an appraisal for an estate, divorce, private sale, investment decision, or another time-sensitive purpose, it's also worth planning ahead. Waiting until the final weeks of the year can add unnecessary pressure when attorneys, accountants, lenders, and other professionals may also be working against year-end deadlines.
Start the New Year Knowing What Your Property Is Worth
You don't have to be buying a home or applying for a mortgage to benefit from a professional appraisal.
For homeowners, families, attorneys, investors, and other private clients, an appraisal can provide valuable information when important decisions involving real estate need to be made.
Definitive Valuations provides residential appraisal services throughout North Alabama surrounding the greater Huntsville area, the Birmingham area, and Middle Tennessee, including the greater Nashville market.
If you need an independent appraisal for estate planning, a private sale, divorce, investment purposes, or another private valuation need, contact Definitive Valuations to discuss your property and appraisal needs. (256) 828-9275
