What do I need an appraisal for? Who can I get to do an appraisal? Will it complete within my deadline? These are only a few questions that come to mind when trying to figure out the burning question: Do I need an appraisal?
My name is Ethan Sorensen and I’m a Certified General Appraiser in Nebraska, Iowa, and Kansas. I specialize in agricultural appraisals, both vacant land and ag commercial properties, in addition to utility towers and rural residential.
The real estate market, post-COVID, has been unpredictable and very favorable to sellers. Interest rates have increased as of late but in the Ag world, we are not seeing a slowdown yet in farmland values or purchasing power here in the Midwest. Many investors and local landowners are taking advantage of good commodity prices and excess cash available to them. These factors make it hard for landowners to value their property, especially if they are contemplating a sale of their property or trying to gift/succession plan to the next generation.
These increases in the market also makes it difficult for professionals such as lawyers, bankers, and accountants to get a real time picture of what that asset and the market as a whole is doing at any given time.
So, do I need an appraisal?
Most commonly in my industry there are for common reasons to consider getting an appraisal:
- Financing: Most lending institutions require an appraisal of assets over a certain value, especially loans that are going to the secondary market.
- Estate Valuation/Tax Planning/Gifting: Many estates need an appraisal to determine a new tax basis. The date of death value is needed to calculate capital gain tax at a later date, if the beneficiaries were to sell the property in the future. Estates may also be subject to state or federal tax depending on the value of the estate’s assets.
- Divorce: The division of assets in a divorce situation may need to be based on the current fair market value of the asset.
- Potential Sale: Landowners may want to know what their property is worth in the current market before they decide to sell. A lot of landowners sell their properties privately or to current tenants and therefore need an appraisal to determine the price between the two parties.
In conclusion, the answer to the main question is that it depends on what you need the appraisal for. Every situation and asset is different, and therefore speaking to a professional is sometimes the best first step in determining if you need an appraisal.
