Getting an appraisal can be highly valuable in certain situations, but it is not always necessary. Whether it’s “worth it” depends on your specific goals and circumstances.
Situations Where an Appraisal Is Typically Worthwhile:
Buying or selling: A value opinion can inform a decision. For financing, ask the lender which valuation process is required.Refinancing: Confirm the lender’s valuation requirements before ordering independently.Property tax matters: Ask the responsible authority or adviser which evidence and effective date are needed before commissioning a report.Estate or divorce: Obtain the intended user’s instructions for the property, purpose and valuation date.Mortgage insurance: Ask the lender or servicer what process and valuation evidence it accepts.Unique Properties or Unusual Circumstances: If your home has unique features or there are no good comparable sales, an appraisal can provide a more objective starting point for pricing or negotiations.When an Appraisal May Not Be Necessary:
Setting a listing price: An agent’s comparative market analysis can inform a pricing discussion. Ask how it differs from a privately commissioned appraisal and whether either service fits your need.General curiosity: Online estimates and sale research can provide a starting point. Confirm the scope and cost before requesting more detailed work.Appraisal vs. Comparative Market Analysis (CMA)
| Feature | Appraisal | Comparative market analysis |
|---|
| Provider | Appraiser suited to the assignment | Real estate agent |
| Purpose | Defined valuation question and effective date | Pricing discussion and market comparisons |
| Before proceeding | Confirm intended use, scope, fee and delivery | Confirm what is included and any charge |
Key Takeaways
Appraisals can be costly and time-consuming, so consider your specific needs before ordering one.An appraisal is useful when it answers the question and meets the intended user’s needs. Confirm those needs before selecting a valuation service.