Home Appraisal? What's that all about?


There are many reasons homeowners may require an appraisal, but the most common appraisal requests are for lending purposes. When a financial institution is considering granting a loan to purchase, improve or refinance a property, they need confirmation of the current market value of the property that will be securing their investment. An appraiser is called upon to provide an unbiased opinion of value based on market research and analysis and a review of the subject property.  Appraisals are also commonly sought for real estate transactions, estate planning, separation and divorce settlements and insurance purposes. 

What does an appraisal entail?

The appraisal process is much more complex than many people realize. What most people see is the inspection portion of the appraisal which is the simplest and fastest part of the process. This is when an appraiser visits a property to complete an interior and exterior walk-through, noting and photographing the attributes, functionality, finishes and overall condition of the property. Measurements are taken and any site improvements such as decking, fencing, sheds, and out buildings are noted. The topography of the land is observed and any external influences such as water frontage or access, wooded areas, the condition and function of surrounding properties.   

Once the site inspection is complete, the real work begins. The appraiser conducts extensive research of not only the subject property but the neighbourhood in which it is located, how it is accessed, proximity to schools, and access to services, amenities, major highways, and public transportation. Then, the appraiser researches the real estate market in the area surrounding the subject property to determine the highest, lowest and average sales prices, the average market time, the number of sales and active listings. Once an overall picture of the market has been assembled, the appraiser seeks out comparable sales – ideally of properties that are considered to be similar to the subject property in terms of location, dwelling style, dwelling size and age.

My neighbour listed their house for $350,000…is that what my house it worth too?

A common misconception among homeowners is that asking prices of similar houses in their neighbourhood are indicative of value in their neighbourhood. One can list their house at any price but until someone actually offers to buy it at a particular price, the list price is irrelevant as an indicator of value. When selecting comparable sales, the appraiser makes every effort to “bracket” the subject property in as many ways as possible with the three comparable sales. This means finding properties that have superior and inferior characteristics compared to the site property, in categories such as site size, living space, and building and site condition. Market-derived numerical adjustments are then applied to each attribute of the comparable properties to arrive at adjusted values for these properties.

Why can’t my realtor appraise my property?

The appraiser is the only party in most real estate transactions who can offer an unbiased opinion of value based on extensive market research, education and experience in real property valuation.  Whether you are a buyer, seller, owner or lender, an appraisal is the best insurance policy out there to protect what will likely be the biggest investment of your life.

Guest blog by: Kate Dunsworth Casey

Kate Dunsworth Casey is a Certified Residential Appraiser and owner of Maison Property Appraisals, a residential appraisal company serving Tantallon and the greater HRM area.  www.maisonappraisals.ca

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