When to get an Appraisal

There are numerous reasons for engaging a Texas Appraiser and obtaining an Appraisal of your property in Texas. The most common reason by far is for a real estate or mortgage transaction.   Below is a list of common other reasons for a Texas Appraisal:  

• Obtain a loan
• Contest high property taxes
• Lower your tax burden
• Satisfy a government agency requirement such as the IRS
• Establish the replacement cost for insurance
• Help you make intelligent financial decisions
• Determine a reasonable price when selling real estate
• Provide a negotiating tool when purchasing real estate
• Use in a lawsuit
• Protect your rights in a condemnation case
• Obtain a qualified appraisal report
• Settle an estate

From these the primary reasons are detailed below:

Settling an Estate

Taxing authorities such as the IRS often require appraisals to establish the value of an estate when a death occurs. Generally, it is in the heirs' interest to produce a conservative value estimate that limits their tax liability as much as possible. However, estate appraisals are generally ordered by attorneys, not by the heirs themselves.

Establishing Replacement Cost for Insurance

Usually appraisals obtained for establishing the loss risk in case of fire are limited to providing a professional estimate of the replacement or reproduction cost of the improvements to the property. In most cases the insurable value is not representative of the actual market value and does not include the value of the land. Insurance agents can order appraisals when their standard cost structures do not cater to an atypical home or structure. Property owners on the other hand may order appraisals to contest the annual appreciation increases mandated by some insurance companies, especially when the increase in the insurance coverage results in an unrealistic premium.

Establishing Just Compensation for Condemnation

An appraiser can represent either the landowner or the condemning authority. Usually, the government entity that needs the land for public use orders an appraisal and offers to purchase the land for the value indicated by the appraisal. The landowner may also order an appraisal, should he feel that the amount offered by the condemning authority is too low.   If the parties cannot agree on a price, the matter will be settled in court with each appraiser testifying on behalf of their respective value estimates. Appraisers will never be advocates of their clients - they are just expert witnesses trying to support their value estimates. In many cases the landowner will not order another appraisal from an appraiser of their choice. Instead, he tries to settle with the authority by negotiation rather than incur the expense of an appraisal. However the investment for an appraisal is often well worth it, as that the landowner's negotiating position can be enhanced if a supporting professional appraisal report is available.

Contesting High Property Taxes

If a property owner feels that his property is assessed too high for tax purposes, he may order an appraisal from a qualified appraiser to contest the assessment. In some parts of the country this is common practice. Nevertheless many property owners are not aware that this avenue for reducing their tax burden is available. The return on investment is easy to see when the relatively low cost of an appraisal is compared to several years of lower taxes. In some cases such assignments include an appearance in front of the equalization board to argue the landowner's case.