Timber Appraisals

Why have an Appraisal? Appraisals are needed for several reasons, including:
To obtain a loan--This is probably the most common reason for having an appraisal completed.  Lenders often request real estate appraisals to establish the property's value for loan purposes.  However, an appraisal not only helps the lender to determine collateral value, but an appraisal can also protect the borrower from paying too much for a property and making an unwise financial decision.

Appraisals are needed to obtain loans, to contest property taxes, and for other reasons.

To settle an estate or assist in financial and estate planning-- Appraisals are often required by taxing authorities, such as the IRS.  When a death occurs, appraisals are used to establish the value of an estate to determine the tax liability to the survivors.  Appraisals are also used in the estate planning process.  One of the first steps in estate planning is to identify assets and estimate their current value.  This is necessary in the planning to minimize taxes, and in choosing

appropriate business and estate planning vehicles for holding, transferring and administering assets.
To determine an offering or selling price for real estate--It is often difficult for a seller to be objective about the market value of their own property.  If one prices a property too low, they rob themselves of value.  If one prices their property too high, it may result in the property not being sold or it being on the market for an extended period of time.  When a property is on the market for extended periods of time, people may begin to perceive that the potential buyers may have already purchased competing properties and no longer are interested in your property.  An independent appraisal can help a seller set a reasonable asking price for their property.
To determine replacement cost for insurance--Some types of insurance are based on the market value of the real estate, and not actual replacement costs of the buildings and improvements.  Insurable value usually does not include the value of land, and may not be representative of market value.  These appraisals are used not only for establishing loss risk for the insurance company, but also for property owners who wish to contest appreciation increases mandated by some insurance policies.
To establish just compensation in condemnation--The government has the right to acquire private property for public use.  However, the Fifth Amendment to the Constitution states that private property cannot be taken for public use, without "just compensation".  Appraisals are often used to determine just compensation.  If the landowner does not believe that the condemning authority is offering enough to purchase the property, the landowner may order an appraisal.
To contest property taxes--A property owner may request an appraisal if they feel that the assessment on their property is too high.  However, there are two things one must consider.  One, will the cost of the appraisal be offset by reduction in real estate taxes over time?  Second, there is the risk that the appraisal will support the current assessment on the property, and you will be out the cost of the appraisal with no reduction in your real estate tax burden.

These are just some of the uses for an a appraisal.  Before contracting the services of an appraiser, it is recommended that you thoroughly check the qualifications of the appraiser.