What is an appraisal?
An appraisal is a thought process leading to an opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience, and professional judgment of the appraiser. Usually, appraisals are ordered for reasons such as estate planning, financial planning or sale price decisions. When an appraisal is used to obtain an opinion of value of a property for loan purposes, federal regulation requires the lender or its agent to place an appraisal order. This opinion or estimate is arrived at through a formal process that typically uses the three ”common approaches to value”.
What is the role of an appraiser?
The role of the appraiser is to provide objective impartial, and unbiased opinions about the value of real estate property-providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers assemble a series of facts, statistics and other information regarding the specific properties, analyze the data and develop opinions of value. Each appraisal assignment challenges the appraiser’s ability to put analytical skills into practice, exercise sound judgment and communicate effectively.
Why do I need a professional appraisal?
When a home or other real estate property is being used to make a significant financial decision, an appraisal is highly necessary, as it will assist you with obtaining the most appropriate value. If you’re buying, it ensures you don’t overpay. If you’re engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anyone owns. Knowing its true value means you can make an informed financial decision.
Why would the appraiser need the agreement of purchase of sale?
The agreement of purchase acts as security document and may be needed for a number of reasons, including agreement clauses that impact the overall value of the property. There may also be discrepancies between the order we receive and what’s on MPAC or Geowarehouse or the listing itself, and it’s our job to ensure we have all the facts and know exactly what has conspired to date regarding a property. There may also be amendments of items added, taken away or changed, or we may notice something while on the property, which would lead an appraiser through the process of figuring out what will be included in the agreement of purchase and sale.
Does an addition on a house create a lot of value, or is the original square footage considered more?
This is a good question that has no simple answer. Unfortunately, the answer is every addition is different and may require different evaluation. If the addition is heated and adds square footage to the house, typically it will add some value. If the addition is not heated we generally do not count it as additional square footage, this is true for the assessment as well and improvement is considered in determining the overall value.
How much consideration is given to the number of offers on a property when you see “sold” or “over asking”?
Zero consideration is given to the number of offers because we do not know the content of those offers. What we look for when a house sells for more than asking are the reasons why it is being sold for over the asking price. Whether the home has been renovated, with the site is like, whether it backs onto a ravine, these are some characteristics we would look at. We also look at the market - is the market trending upward, downward or stable. If so, by how much? We analyze the neighbourhood and may require an application for time adjustment to older comparable sales.
How are the number of adjustments determined?
Adjustments will vary by neighbourhood generally speaking. We analyze sales in a localized area to determine what those adjustments would be.
What qualifications are needed to be an appraiser?
The Appraisal Institute of Canada website can explain this better than we can. Visit their website to find out more: https://www.aic
Who owns the original appraisal report?
Although the applicant or a third party may have paid for the report, if the bank is the client, then it owns the report. The client is the individual or organization for whom the appraiser member renders professional services to.
What is the difference between an Appraisal and a Home Inspection?
The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party evaluation of the accessible structure and mechanical systems of a house, from the roof to the foundation. The standard home inspector’s report will include an evaluation of the condition of the home’s heating system, central air conditioning system, interior plumbing and electrical systems; the roof, attic and visible insulation, as well as walls, ceilings, floors, windows, doors, the foundation, basement and visible structure.