Before an individual sells their home, it is important that they seek out the expertise of an appraiser. This real estate professional is able to reliably assess the overall value of a home that the owner intends to put on the market. For those looking to buy, the appraisal of a home helps to keep the playing field level between buyer and seller so that the buyer isn’t put on the hook for an amount that far exceeds the actual value of the property.
There’s a bit more to it than having a licensed appraiser with a clipboard take a gander at the property. In this article we will break down the appraisal process and help you gain some clarity on the matter – long before you buy or sell a home (Full details: https://askross.ca/second-mortgages-toronto-and-gta/ ).
What is an Appraiser Looking For?
To determine the value of a property, the appraiser must look at a number of factors. Such factors include, but may not necessarily be limited to:
- The location of the property
- The size of the property
- The number of rooms
- Add-ons, if any
- Various measurements
- Any deficiencies or damages
- Improvements that have been made to the property
What Happens After the Appraiser Assesses All of These Factors?
Once the appraiser has perused the property after taking into consideration the items above, they will draft a report. They use their due diligence, common sense and industry connections to create an accurate report that will then be visible to both the buyer and the seller once the home is up for sale.
How Does an Appraiser Determine a Property’s Value?
There are three valuation approaches that Canadian appraisers use to determine the value of a home and the land upon which it resides:
- Direct comparison – The property in question is compared to similar properties in the area that have been sold within a specific timeframe.
- Cost – The depreciation of the property is subtracted from the added value of the home’s improvements and the cost to replace the land to determine a value.
- Income – Based upon the projected income from a rental property, a value is determined.
What Circumstances Impact the Value of a Property?
There are many conditions that can affect the overall value of a property. Market condition, location, size, physical characteristics and zoning are all on the laundry list of determining factors. Ask the appraiser when they view the property by what standard they are measuring your home’s value.
If you have any additional questions about the appraisal process, either as a buyer or a seller, it is worthwhile to reach out to a professional appraiser for further information.