Evaluating The Techniques of Pricing Your Home -1 of 3 articles

If you decide to go this route you would need to request an appraisal specifically to determine the market value of your home. Most appraisers are state licensed and regulated. They are privy to a wealth of information about prior sales, which can make your work easier, but this information does not come with out expense to you. There is typically a fee ranging from $350.00 to $575.00 for an average property.

An appraisal, however, is basically a numbers game--and numbers can be skewed--so be suspicious of an appraisal that seems to be higher than any other sales in the area.

As a whole, appraisers offer a valuable service to lenders, banks and mortgage companies. On the other hand, I have not found them to be effectively accurate in determining market values for residential properties. My experience tells me that they tend to be overly optimistic about market resale values, perhaps giving more weight to replacement values and/or costs rather than actual market trends. In fairness to the appraisers in your region, perhaps their policies and practices differ.

Accordingly, I have a serious problem with a profession that allows for so much non-standard application of data. A few years ago in Texas, for example, laws were adopted to allow individuals to take out second mortgages on their homestead property. While these laws frequently exist in other states, Texas was a holdout state for fear that consumers would produce more debt than they could handle. The only set back or failsafe to prevent this from happening was that lenders required a 75 to 80 percent loan to value ratio with your first mortgage. In other words, if you owed $90,000 on a $100,000 home, you would not qualify. The solution was simple, however, just get an appraiser to evaluate your home value at $115,000 or higher. You pay the appraiser, who is picked by the lender, so they get their money. The lender gets a piece of paper justifying the loan in their files and makes their money from the interest you pay plus the fees they charge to give you the loan. Make no mistake about it, even if you add the costs involved in getting the loan to the actual loan, you are paying for it. At the time it may seem like they have done you a favor but in reality this is a gross injustice.

When the extra cash runs out,

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