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Home Appraisals
How
much is your home really worth?
There
can be a significant gap between what your home means to you and its value on
the open market. Most of us simply don’t have the tools or expertise to
determine market value — and emotions can also cloud our judgment. Homeowners
can often over-value their homes; after all, you're proud of your home and the
work you’ve done to make it comfortable. There’s a
sentimental value to it and we tend to think that renovations that fit our needs
and lifestyle also fit what the market wants. That is not always the case.
That’s where a qualified home appraiser can help. The Appraisal Institute of Canada (AIC) is the premier real property valuation association in Canada. The AIC is a self-regulating professional organization with over 4700 members across the country. The AIC grants the distinguished Accredited Appraiser Canadian Institute - AACI™ and Canadian Residential Appraiser – CRA™ designations to individuals across Canada and around the world.
The
Value of Expert Advice
When determining a
home’s value, many factors come into play (some big, some small) . A home
appraisal involves a comprehensive series of steps to determine your home’s
appraised value — which is also known as market value.
-
Inspect your home: An inspection of the property is one of the many tasks performed by an appraiser. Home appraisers will, among other things, look at the physical characteristics, the size and the overall condition of your home to help determine its value. Home appraisers look at the quality of the improvements and if the interior and exterior are being maintained properly.
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Inspect your land: Appraisers also look at the site improvements, including landscaping, outbuildings (i.e. garage), deck and pool.
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Perform a market analysis: What’s the economy doing? What’s motivating people to buy (or not buy) homes? At what price did comparable homes sell for in this neighbourhood? These are just some of the economic drivers that a home appraiser will consider.
Essentially, the
appraised value of a home is driven by the action of buyers and sellers, in a
particular market, at a particular point in time. So there are some things a
homeowner can control (how they improve and maintain their property) and others
they simply cannot (the economy and what buyers want).
Time
for a home appraisal?
Not all home appraisals are for sellers. You may be:
-
Thinking of buying or selling a home: Since home appraisers are not paid based on the selling price of a home, they provide an unbiased and independent view of its market value.
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Inheriting or bequeathing property: Whether you’ve inherited a property or are writing up a will, knowing the property’s value will help with decisions you need to make (including ones that deal with probate taxes).
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Determining past and future value: When homeowners separate for matrimonial reasons, they may need to know the value of the matrimonial home at the time of separation, which, in some cases, could mean going back in time. And if you’re renovating a property, you may want to know how much it will be worth in the future, once the repairs or improvements are complete.
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Financing or refinancing: If you’re personally getting an appraisal on your property, contact your lending institution (such as your bank) before you start to ensure the appraiser you’re hiring is on their approved list. This will help avoid paying for an appraisal unnecessarily.
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Consolidating debt: When restructuring your debt or if facing bankruptcy, it is important to know the value of your property to know how much equity is available.
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Considering a renovation: Planning a renovation is key to protecting your investment. Before you start a renovation, a home appraiser can advise on the most cost-effective ways to upgrade your home.
Renovations
that make dollars and sense
Some
renovations will add more value to your home; others not so much. Home
appraisers can offer advice on what upgrades will pay off and how to avoid
spending too much on a renovation that the market may not support. For instance,
investing $50,000 on a gourmet kitchen may be an over-improvement for a home in
a particular market that will only allow you to recover $10,000 - $15,000 at
time of sale. Consider the following before renovating:
-
Think big, and long-term: Roof, energy-efficient heating and cooling systems, windows — anything that a potential buyer won’t have to worry about for the next 10 to 15 years. Just remember that proper and regular maintenance are key.
Expert tip: Pools are very subjective. What appeals to a homeowner may not appeal to a potential buyer. Again, it comes back to personal lifestyle. -
Think modern and appealing: That usually equals kitchens and bathrooms. But you may not need to completely re-do them to modernize and enhance the appeal of your home. Perhaps a new countertop, floor, fixtures or resurfaced cabinet doors may be enough.
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Think small: Not all equity-boosting projects cost a bundle. A fresh coat of paint, modern lighting fixtures, light landscaping or gardening, and even upgraded door handles can give your home an updated and upgraded look and feel.
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Think time: Figure out how long you plan to stay in your home. If you plan to stay for many years, you may want to spend more on renovations. If you think you might be selling in the short term, smaller items may be your best bet to recover your investment.
Finding
and working with a home appraiser
You can find a
qualified home appraiser by using the Find
a Real Value Expert search tool on the
AIC’s website. The AIC has over 4,700 members from coast to coast. You can
narrow down your search by geographic area and areas of expertise; for example,
single family homes, condos, hobby farms and rural properties.
Before you start
working with a home appraiser, inquire about the following:
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About their professional designation [Accredited Appraiser Institute of Canada (AACI) or Canadian Residential Appraiser (CRA)];
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If they belong to a professional appraisal association (such as the AIC) and how long they’ve been in the business;
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Their area(s) of expertise;
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How much they’ll charge for appraising your property; and
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What’s included in their fee and what kind of report you can expect to receive.
For
more information, download the AIC’s Consumer’s guide to understanding the residential appraisal
process.
