Why do they ask what do you need the appraisal for when asking to have your property appraised? Does it matter if you are either selling, refinancing or other reasons? Isn't the price simply the price?
Good stuff! This is an automatic response.What bnmappraisal said.
In short: If you want me to do an appraisal on a property, I need to know what you want to do with the results (usually, "the value") so I can determine what I need to do (in terms of research, in terms of what kind of valuation techniques I'm going to use, and in terms of what I'm going to write in the report) to make sure what I do meets your needs.
To put this another way: You call and ask for an appraisal on your home. I ask why you want an appraisal and how do you want to use the results......
1. You say you want the appraisal to get a loan form a lender. I'm going to tell you that as a rule, you cannot order your own appraisal for that purpose and that the lender will probably order the appraiser.
I just saved you my fee.
2. You say that you need it for estate purposes; there should have been an appraisal done 3 years ago and your accountant has informed you that if there wasn't one done, you need to get one.
Now I know this is for estate tax purposes so I'm going to have to use the correct IRS definition of value as well as find out what the historic (we call it "retrospective") value date is.
3. You say that you are thinking of adding on to the house and want to know how much it is worth now and how much it will be worth when you are done; you'll use this information to determine if the addition makes financial sense.
You need two appraisals; one as-is and one on a "what if?" (we call that a hypothetical condition) scenario. You'll get one report with two values.
4. You don't believe your insurance company's replacement-cost for your house if disaster strikes and it is a covered event. You want to get an independent cost estimate to make sure you are not under- or over-insured.
This type of valuation isn't "market value". It is "insurable value" and this is a very different kind of appraisal than any of the others above. If don't know this is what you need and are going to use it for, I might make the mistake of giving you something that will be useless for your purposes.
5. You say that 8 people are owners of the property where you live; each has a different interest (percentage of ownership) and you want the value of your interest which is 13%, undivided.
This type of appraisal will need to value the house as if it were owned under single-ownership and then value your partial interest at 13%. Your partial interest is likely not a 13% pro rata share of the single-ownership value of the home.
I think you get the picture.
When I get a call from a potential client, one of the first questions I ask is, "Why do you want an appraisal and what are you trying to achieve with it?" Based on what you tell me, I'm going to decide if I can give you what you need or recommend something else.