What is a real estate appraisal?
There are two terms most often discussed when considering the value of a property: market value and appraised value.
Market value, or sales price, is the price that a buyer or buyers are willing to pay for a property in a specific neighbourhood, in the market; it can be the listing price or a higher or lower price, depending on demand (in a hot market, prices may be above the listing price, while in a slower market they may be below). Market value is impacted by supply and demand.
Appraised value considers factors such as the property’s features, condition, improvements, location, as well as market trends and data (including recent sales and financial data and policies that could impact sales). While the market value considers what someone may be willing to pay for the property in a specific market; the appraised value considers what the property is worth.
What do real estate appraisers do?
Real estate appraisers play an important role in the real property market by providing unbiased appraisal, review, consulting, reserve fund planning, machinery and equipment, and mass appraisal valuations. They are highly trained professionals and experts who provide unbiased, accurate valuations of real property.
Their opinions of market value are based on comprehensive research and analysis, and must adhere to strict requirements and standards:
- NBAREA policies, requirements, and bylaws, and
- Professional Standards
- Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP), or
- Uniform Standards of Professional Appraisal Practice (USPAP), for members
When should I consider hiring a real estate appraiser?
There are many situations where consumers may prefer or require to have an appraisal, including when:
- renovating, building, buying, or selling property
- financing or refinancing property
- making real estate investment decisions
- reviewing property tax assessments
- assessing capital gain
- valuing property for business mergers, acquisitions or dissolutions involving real estate
- making a claim for insurance purposes
- determining expropriation compensation
- valuing property for matrimonial purposes, arbitration, or other litigation
- valuing private property acquired by government for public use
- valuation of machinery and equipment
Some real estate appraisers also bring specialized expertise in niche areas such as:
- expert witness testimony
- litigation support
- cost-benefit studies
- feasibility studies
- market analysis and market rent studies
- asset/portfolio management
- due diligence
- business valuation
- tax assessment
- machinery and equipment
What types of property do real estate appraisers evaluate?
Real estate appraisers provide valuation services for properties such as:
- single-family dwellings
- small and large rental properties
- vacant land
- condominiums (townhomes or apartments)
- office buildings
- shopping centers
- industrial sites
- retirement and long-term facilities
- recreational sites such as golf courses