If you are planning to refinance your home you should get a free house appraisal. If you call the bank, they will usually hire an appraiser and charge you for the appraisal. In some rare cases, the bank will offer the appraisal for free. www.increasehomevalue.org
If you can give the bank a good idea of the value of your home, they can work the interest rates and terms before they hire a real estate appraiser. This way, you will know if you'd like to make the deal work before you start signing contracts and lock yourself into a deal that you may not agree with.
If you are planning to sell your home you need to find out what your home value is. A good place to start is with free on line databases to see what the range of value is. From this point, you'll want to dig a little deeper, though, because many times these free databases don't accurately value your home.
Here's what I've found. Sometimes they are spot on, but many times they are $1000 of dollars off. I just appraised a home yesterday that was about $30,000 off. So you see if you are refinancing your home, it may be a good starting point, but if you are selling your home, start with the free databases. From this point, you'll want to review the sales that they used and make sure that they are the most similar and recent. Next, you’ll still want to hire a good Realtor or an appraiser to make sure your home value is accurate.
If you’re confused, hire an appraiser to complete a desktop appraisal. These are one of the cheapest appraisals. If you can't find an appraiser to complete a desktop appraisal, hire an appraiser to complete a drive by of your home. This will cost a bit more, because the appraiser will drive by your home and review other sales in your market area. The third best choice is to hire an appraiser to complete a full appraisal or hire a Realtor to complete a BPO (broker price opinion) or a CMA comparable market analysis. Sometimes Realtors will charge a small fee for these, but most of the time they will be free because the Realtor wants to get to know you and win your business when you are ready to buy or sell a home.
If you are planning to buy a home, find out what the value of the house that you are thinking of buying is. This is important. Many times buyers just let their Realtor take care of things. You always want to double check and ask question. Get on line and type in the address of the home you are going to buy. Not only can you get a free value, but sometimes you will find the home that you are considering buying and find listing history or different prices of what the Realtors did not tell you about.
Don't use the bank’s appraisal to see if the deal will work. Before you have the bank hire the appraiser, complete an appraisal or have your Realtor provide comparable sales that are similar to the home you are buying, even if you have to pay $400 or more. It may be the best thing that you ever did. The bank will have to hire an appraiser, but remember, the appraiser is working for the bank, not you and you will usually want to understand the values in the area before you make an offer.
Why so much caution? I once appraised a home that the bank assigned me. The order was a drive by appraisal. The value came in $30,000 below the purchase price. Guess what, since the owner placed a larger amount of money down, the loan will still go through. Why, because the owner is taking the risk. This owner just lost $30,000 and I don’t want you to be the next loser.