Appraisal FAQs
What is an appraisal?
An appraisal is a formal opinion of value, based on market data (also known as ‘recent sale data’ and ‘cost data’), that is researched and completed, based on the subject property (i.e. your home, cottage, condo, lot).
The appraisal is based on one of three approaches to value: the Direct Comparison Approach, Cost Approach or Income Approach.
The Direct Comparison Approach is based on sales similar in age and style as the subject.
The Cost Approach is based on the cost to build new with consideration for depreciation of mechanical, cosmetic, and structural systems of the property.
The Income Approach is primarily considered in commercial situations; however, in some instances, considered with residential property.
Why do people need an appraisal?
Appraisals are used for a number or reasons, primarily by financial institutions for purchase or refinancing after you have occupied a property. The financial institution is looking for a confirmation of value and overall condition of the property. Appraisals are also required for purposes of equity division for marital/ common law relationships, estate purposes, family/friend purchasing, or to verify that a) the assessment for your property is reasonable and b) the taxes that are paid are fair for the property that you own.
What is the difference between an appraisal by a certified appraiser and a market analysis from a real estate agent?
An appraisal* is a legal document that can be used by financial institutions, lawyers, courts, for the intended purpose of your specific situation. It is relied upon in legal matters, to lend money, and can be used to settle disputes. It is a value based on a specific date and the condition of the property at the time of the appraisal (or secondary determined date).
A market analysis is used to try to determine what the property may sell for, at a future date, and may include improvements to the property that are not present or completed at the time of the initial inspection.
*An appraiser’s assessment is based on the most recent sale data to determine the present value of your property.
Are appraisers qualified?
All appraisers must be regulated and belong to one of two organizations in Canada. The Appraisal Network’s team of appraisers are all with The Appraisal Institute of Canada (AIC) that offers the Canadian Residential Appraiser (CRA P.App.) designation for residential appraisers. The CRA designation is the most recognized, respected, and appreciated designation in Canada. Along with the highest education requirements, the founders of The Appraisal Network believe in a strong work ethic and understanding of real estate markets to provide the best report possible for your needs.
I am getting my house appraised – what do I need to do?
The first step in getting your house appraised is a house inspection. For this stage, your property should be ready for the inspection of all interior and exterior elements, including (but not limited to) the furnace, mechanicals, electrical panel, garages/sheds, and yard site).
As part of the inspection, there will be photos taken of the interior and exterior. Note to homeowners everywhere: this does not mean that you need to clean for a week; breakfast dishes on the counter do not skew the overall condition of the property! What is important is the size, overall condition, and maintenance of your property.
Items that are useful include a survey certificate, tax bill, list of upgrades that may not be visible at the time of inspection. If your home has undergone a major repair/upgrade, then have your quotes/receipts available for verification via the inspection.
Is there a difference between an appraisal and a house inspection?
Absolutely! An appraisal is used to determine the value of the property at a given time, based on sales. While appraisers view all ages/types of housing – and are familiar with the mechanical, structural, cosmetic features of properties – they are not qualified to determine a cost to repair any damage/work required for a property. At The Appraisal Network, we use quotes provided by professional contractors to determine a value for a cost of repair and/or renovation.