Should You Get Your Home Appraised?

Young man considering getting home appraised.

When you take out a mortgage, the lender typically has you hire an appraiser to verify the house's market value before issuing the loan, but here are some other times it might make sense to hire an appraiser.

When Should You Get a Home Appraisal?

There are a number of situations where you might be required to or choose to get a home appraisal. Some of these times include:

1. When Challenging a Tax Assessment

If your property tax bill has increased because of a recent reassessment that you believe overstates the value of your property, a licensed appraiser's report documenting your home's value can help you make your case to the local assessment board.

When choosing an appraiser for this job, look for one with experience dealing with the relevant assessment authority and have them prepare a report that mirrors the methods the board uses to calculate home values.

2. When Settling an Estate

If a deceased person's estate includes real estate that hasn't been transferred to a trust, a property appraisal may be required for purposes of calculating estate taxes, settling the individual's final tax return or dividing the estate among multiple heirs.

3. As Part of a Divorce Settlement

If your home is a marital asset that will not be sold as part of divorce settlement, an appraisal can be used to assign it a value for use in dividing joint property.

Before hiring a professional under these circumstances, take care to identify an appraiser who is acceptable to the court.

4. When Seeking Removal of Private Mortgage Insurance (PMI)

If you secured a conventional mortgage with a down payment of less than 20% of your home's purchase price, your lender likely insisted that you pay private mortgage insurance (PMI) premiums to help cover their expenses in case you fail to keep up with your mortgage payments.

By law, PMI premiums must be lifted automatically after you've paid down 22% of the principal on your loan, or halfway through your repayment term (after 15 years on a 30-year mortgage,for example), but you can have it removed sooner if you can show that your home's market value has increased enough to give you a 20% home equity stake. An appraiser can document growth in your home's market value due to improvements you may have made on the property or market trends.

Before you hire an appraiser for purposes of PMI removal, consult your lender and be sure to work with an appraiser whose findings they'll accept.

5. When Refinancing or Borrowing Against Home Equity

If you're refinancing your home or if you wish to take out a home equity loan or home equity line of credit (HELOC), the lender may require an appraisal to confirm your home's market value, and to help decide how large a loan they are willing to offer you.

An appraisal isn't always required under those circumstances; however, if one is necessary, the lender will want to choose an appraiser it trusts, so getting an appraisal on your own could be a waste of time and money.

6. When Selling Your Home

Home sellers sometimes get appraisals to help set their asking price. This may not be necessary, however, if you're working with a professional real estate agent. As part of their normal services, real estate pros typically conduct research known as comparative market analysis that looks at the prices on homes similar to yours that sold recently in your area. They can use this information, and their own evaluation of your home's location and condition, to recommend an asking price.

How Much Does a Home Appraisal Cost?

The average fee for a home appraisal nationwide is about $350, according to HomeAdvisor, a national directory of artisans and home contractors.

Some regions of the country are less costly, and some are pricier. In any locale, you can expect to pay extra for an appraisal if the property in question is:

  • Unusually large for the market
  • A multi-family home or apartment building
  • Has outbuildings in addition to the home and garage (carriage house, workshop, pool house, etc.)
  • Outfitted with unusual amenities (indoor pool, built-in bowling alley, basketball court or wine cellar, panic room, etc.)

How to Get the Most Out of an Appraisal

A home appraisal has two components:

  • A visit to your home to document its attributes and condition.
  • A price comparison on properties with similar attributes sold recently in your local market.

The home visit may play less of a role in determining your home's value than the pricing comparison, but you can exercise some control over it (unlike the sale prices of other homes in your neighborhood). Taking the following steps can help your appraiser get a fair and accurate picture of your home's value:

  • Furnish the appraiser with a list of recent improvements you may have made on the property (or defects, if you're seeking a reduced assessment. Be ready to furnish receipts and other backup information upon request.
  • Clean up as though your pickiest relatives are coming for the weekend, so the appraiser can easily see all relevant features of the house and so the property is seen in its best light.
  • Make minor cosmetic or structural repairs, such as touching up painting, replacing loose or missing tiles, repairing broken molding, etc.
  • Spruce up the yard, if you have one, since "curb appeal" is a real, if hard to define, component of home value.
  • Plan to be home when the appraiser visits. You shouldn't shadow them as they work, but you should let them know you're available to answer any questions—and be prepared to do so.

The Bottom Line

When hiring a property appraiser, be sure to check references, make sure all licenses are up to date and check that the individual you're considering has experience with specific procedures you require (tax assessments, probate or divorce court, etc.). If you're planning to refinance or borrow against home equity, check your free credit report and credit score from Experian to see how lenders will view you, and consider polishing up your credit profile to get the best possible borrowing terms.