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COMMON QUESTIONS
THE HOME INSPECTION WENT WELL. WHY IS AN APPRAISAL NECESSARY?
An inspection and an appraisal are two separate entities. A home inspection ensures that a property is physically sound; whereas an appraisal ensures that the property’s value is correct.
An appraisal validates the accepted sale price of the home, to make sure it’s appropriate given the current market and the features of the house.
Stakeholders and mortgage lenders require an appraisal before they agree to provide their client with the loan necessary to officially make the purchase. They need to make sure the property is indeed worth what both the seller and the purchaser agreed it was worth.
WHAT IS AN APPRAISER?
Appraisers are skilled professionals that are responsible for providing an informed and unbiased opinion of market value. Appraisers need to know acceptable principles of value and need to have practical experience, technical education, good judgment and knowledge of mathematics, accounting and economics.
The appraiser must also closely examine current market conditions in the property's geographical area. This may include analysis of similar type properties in the area that have recently sold and are believed to be close in value to the property in question. The appraiser is also responsible for verifying any legal descriptions, determining which property characteristics that might impact value ie. high traffic artery, the highest and best use of the property and overall quality of the building(s).
DOÂ APPRAISERS HAVE SPECIAL TRAINING?
Designated members of the Appraisal Institute of Canada must pass rigorous education requirements and testing, complete a demonstration report or equivalent, and show extensive residential appraising experience, based on strict criteria. Members must conduct their professional activities in accordance with the Appraisal Institute of Canada’s Code of Professional Ethics and are subject to peer review.  Finally, CRA members are required to adhere to strict continuing education requirements to ensure they are kept up-to-date with the evolving real estate field.
WHAT HAPPENS DURING AN APPRAISAL?
An appraisal consists of a physical visit to the property and then extensive research and data analysis to arrive at a conclusion.
During the home visit, the appraiser will complete a visual inspection of the interior and exterior of the home, ask questions, collect data, and take numerous photographs. The appraiser will note any areas of potential concern, but it is beyond the appraiser's expertise to test all components to make sure they’re in working order.
During the research component, the appraiser reviews recent sales, current listings and all other information in the marketplace that they see fit.
Based on the research and data compiled, the appraiser then delivers an educated opinion of value for the property in question.
CAN MY REAL ESTATE AGENT COMPLETE APPRAISALS?
The simple answer is "No". However, they can complete detailed estimates and provide sellers with comparative market analyses to help determine how much potential buyers will pay for their home. Ultimately, real estate agents can offer a valuable perspective on a given property's purported value, but only the appraiser can provide an official appraisal. Most buyers eventually hire both an agent and an appraiser. These parties may communicate about a given property, but the agent cannot attempt to influence the appraiser's final valuation.
WHAT IS THE DIFFERENCE BETWEEN AN APPRAISER AND A REAL ESTATE AGENT?
Real estate agents and appraisers often gather and examine similar information, with both looking to the Multiple Listing Service (MLS) for information on comparables. Appraisers enjoy access to public records, but the key difference lies not in the information they gather, but how they use it.
Real estate agents promise to represent their clients' best interests. They desire the best possible listing for their clients and will use gathered market information to this end.
Appraisers are paid outright - not on commission - and they do not have a vested interest in serving the client's needs beyond providing a thoroughly completed estimate. In fact, they must clearly indicate that they are third-party professionals and not advocates for either buyers or sellers.
Despite examining similar records, real estate agents and appraisers may arrive at different conclusions, purely because their goals and perspectives differ considerably based on the nature of their interactions with clients. Both estimates are worth considering, and both professionals play a valuable role in real estate purchases.
The real estate market is ever-changing. To ensure availability, please email, call or text first.