Should I Get My Texas Home Appraised?

When to Get Your Home Appraised in Texas?

Deciding the optimal time for a home appraisal in Texas hinges on various personal and market conditions. Applying for a mortgage or selling a house requires a home appraisal. However, you could get your property appraised for many reasons besides home financing.

Before Buying a Property

When you’re in the market to buy a house, it’s typically your responsibility to arrange and pay for the appraisal. Unless you’ve managed to work out a deal with the seller or lender, it is often a part of your closing costs. The appraisal usually falls on the buyer because it’s primarily for the lender’s benefit. The bank ensures that the mortgage matches the property’s actual value. Consider getting an appraisal contingency that lets you walk away from a home purchase if the appraisal shows that the property’s market value is lower than the agreed-upon purchase price.

Preparing to Sell Your Home

Getting a home appraisal before you put your property on the market can be a strategic move, even though it’s typically the buyer’s responsibility. As a seller, having an up-to-date appraisal allows you to set a price that accurately reflects your home’s value. This proactive step helps avoid the pitfalls of overpricing, which can leave your house lingering on the market for too long. Having an appraisal attracts more serious buyers and helps you secure a fair deal. 

Refinancing Your Home or Equity Loans 

If you are applying for a home equity line of credit (HELOC), refinance, or equity investment, the lender may ask for an appraisal to confirm your property’s market value. The current and fair market value helps investors decide the loan amount. However, getting an appraisal on your own could be time-consuming, as lenders might want to appoint professionals of their choice. So, communicate with your lender before getting one, as appraisals can be costly.

Appealing Tax Assessments

If you think a recent reassessment has unfairly increased your property tax, getting an appraisal from a licensed professional can be a solid step in contesting this increase. The new assessment should document the fair value of your home, providing compelling evidence to present to your local tax assessment board. Selecting an appraiser familiar with the valuation methods used by your county’s appraisal district is particularly helpful. Such professionals can tailor their report to mirror local tax assessors, enhancing the credibility of your protest. 

Settling Estates in Cases Like Inheritance or Divorce

In Texas, appraisals play a crucial role in settling estates, particularly for inheritance and divorce cases. When real estate is part of a deceased person’s belongings that wasn’t in a trust, an accurate appraisal is necessary to assess the property’s value. The valuation is important for calculating applicable taxes, completing the deceased’s final tax return, and distributing assets among eligible heirs.

Similarly, in divorce cases, when a home is a joint marital asset, and there are no plans to sell it, an appraisal helps determine its value so that assets are divided equitably. Objective assessment by a professional appraiser provides a reliable figure that can be used in negotiations or court proceedings, facilitating a fair resolution. 

In both scenarios, engage an appraiser who meets Texas’ legal standards for court settlements.

Navigating Bankruptcy 

Appraisals are critical for navigating bankruptcy, as they help to determine the actual market value of an individual’s assets.

• Accurate asset valuation: When filing for bankruptcy, an appraisal gives a current market value of properties, vehicles, and other significant assets. 
• Exemption decisions: Certain assets can be exempt from liquidation depending on their value. Appraisals help determine if the equity in an asset, like a home or car, falls within the allowable exemption limits set by state or federal law. Accurately appraised values ensure that debtors can rightfully claim exemptions to which they are entitled.
• Equitable distribution: A trustee may liquidate non-exempt assets to pay creditors. Accurate appraisals ensure that these assets are sold for their market value.
• Court proceedings: During bankruptcy proceedings, courts require evidence of asset values. Providing professionally conducted appraisals can support a debtor’s claims regarding asset values, influencing the court’s decisions on asset treatment and repayment plans.

When Seeking Removal of Private Mortgage Insurance (PMI)

If you took out a conventional mortgage in Texas with less than a 20% down payment, you are probably required to pay for private mortgage insurance (PMI). PMI protects your lender if you default on your mortgage. 

Legally, PMI automatically drops off after you’ve paid down 22% of your loan’s principal or once you reach the midpoint of your loan term. However, you can request to have PMI removed earlier if you can demonstrate that your home’s value has increased, boosting your equity to at least 20%. An appraisal can document this increase in value, saving you from continuing to pay PMI premiums.

Bail Bonds

Your Texas home can be used as collateral for bail bonds. Here’s how an appraisal helps:

• Establishing property value: When someone gets arrested and a bail amount is set, they might not have enough cash to pay the bail. Texas law allows real property (like a home or land) as collateral for a bail bond. An appraisal is necessary to determine the property’s market value, ensuring that the value is sufficient to cover the bail amount.
• Ensuring equity requirements are met: For property to serve as collateral, it must generally have a certain amount of equity — often significantly more than the amount of the bail. An appraisal confirms that this equity requirement is met.
• Legal compliance and accuracy: In Texas, using property as collateral involves legal stipulations regarding the property’s valuation and equity. A certified appraiser’s accurate and recent appraisal ensures compliance with these legal requirements, minimizing the risk of delays or legal challenges.

How to Get the Most Out of Your Appraisal?

To get the most out of your appraisal, make sure to: 

• Give the appraiser a list of all the property’s renovations and recent improvements (or defects).
• Provide receipts for all furnishings.
• Clean and declutter your home to show it in its best light.
• Make minor aesthetic or structural repairs, translating into a higher market value.
• Spruce up your yard and elevate the curb appeal.
• Be home when the appraiser visits to address questions and concerns.

How Much Does a Home Appraisal Cost in Texas? 

The home appraisal fee is around $675 to $800 in the Lone Star State. However, this price depends on factors like the type of appraisal and property.

Understanding the types of home appraisals can help you choose the right one for your situation. Here are some kinds of appraisal services you can get in Texas:

Traditional Appraisal

The appraiser visits your house in person to review the real estate in your area and your home. This appraisal report usually provides the most accurate market value of the property.

Desktop Appraisal

The appraiser evaluates your property via publicly available data. Although a cheaper alternative, most lenders do not accept this evaluation.

Drive-By Appraisal

The appraiser evaluates your property from the outside. Again, this is a cheaper alternative, but not all authorities accept it. 

Hybrid Appraisal

This type has two appraisers. One conducts an assessment onsite, and the other analyzes the online data. 

To Appraise or Not to Appraise?

So, should you get your Texas home appraised? The decision boils down to your specific circumstances and goals. An appraisal can clarify your home’s market value, which is especially useful if you plan to sell your Texas house, refinance, or settle estates. It ensures you’re making decisions based on solid, current market data.

However, appraisals come with costs and sometimes unexpected outcomes. If the appraisal puts your home’s value lower than you thought, it can mess up your plans. The expense might not seem worthwhile if you don’t have any immediate plans to act on the information.

Generally, appraisals are a good idea to document your property’s worth. We recommend getting professional advice on whether or not to get your Texas home appraised.