What is the role of a certified appraiser?
Last update : 2022-09-21 16:08:09
Want to have the market value of your home assessed? Then you need a certified appraiser!
We've already discussed this specialist in many of our previous articles. However, we have never taken an in-depth look at their role and the different tasks that such individuals often undertake. In light of this, we thought it would be a good idea to offer you an overview of this real estate profession.
So what is a certified appraiser?
A certified appraiser is a professional who provides an objective opinion on the market value of real estate property or rights. Through a variety of assessment and analysis methods, they conduct a systematic review and produce a written report which enables their client to make an informed decision.
A certified appraiser must also be a member of a certain professional association - the Ordre des évaluateurs agréés du Québec (OEAQ). They must also adhere to high standards of practice and a code of ethics, and must participate in ongoing training. Prejudices and personal interests have no place in the profession, something which makes such professionals trusted partners.
Being able to work in both the public and private sector, such experts are called upon to intervene in several situations, such as:
- The purchase or construction of a building;
- The sale of a property;
- Negotiating a mortgage refinancing;
- Sharing of family assets;
- Carrying out of the municipal assessment;
- Determination of the reconstruction value of a condominium;
- And much more.
What does a certified appraiser do?
These professionals do more than just one job. In fact, their responsibilities are much more varied! Although they are mostly known for carrying out assessments, several tasks actually fall within their remit.
Even before commencing research and analysis, appraisers must clearly define their terms of reference and set out the reasons for which the client has opted to use their services. Depending on the purpose of the assessment (sale, purchase, refinancing, etc.), they are responsible for identifying the services, costs and timeframes required to fulfil their terms of reference.
Research and information gathering
Once the terms of reference have been defined, the appraiser conducts the research necessary for the assessment. This involves identifying numerous relevant documents and verifying the validity of the information collected. Depending on the case, this may include:
- Assessment role;
- Municipal taxes;
- Residential or commercial leases;
- Operating expenses;
- Certificate of location;
- Zone by-laws;
- Architectural plans.
Visits to the building
After gathering all the necessary preliminary information, the certified appraiser then proceeds to undertake a visit to the relevant property. They examine the entire property and its features. They may also take photographs of the interior and exterior to help them to reach a conclusion and produce their report.
Note that the appraiser's visit is completely separate to that of the building inspector! The intention is not to find defects or possible faults. Rather, it merely determines the general condition of the property, looking at:
- The level of wear;
- The main elements;
- The quality of the materials.
In addition to visiting the property itself, the appraiser also visits the neighbourhood in which it is located. The immediate environment does have an impact on the value of an asset. The expert therefore remains on the lookout for any strengths and weaknesses:
- Is the place accessible by public transit?
- Is there a school nearby?
- What services are located in the area?
Evaluation and analysis of data
Once all the data has been collected, the appraiser is able to determine how they will decide the market value of the property for which they were hired. Their analytical work is based on three evaluation methods:
- The comparable method, which consists of comparing the property with similar properties to determine its value;
- The cost method, which takes into account the value of the land and the cost of depreciation of the building;
- The income method, which analyzes the financial situation (income and expenses) of the building.
With some exceptions, the appraiser must use at least two of these three methods in order to be able to establish with certainty the market value of the building.
Once the appraiser has completed their analysis, they must provide the client with a written report that includes the identification and description of the asset being appraised, the factors that influenced the appraiser's judgment, and the appraiser's conclusion on its value. The client then has a solid and professional basis on which to justify the price of their property.
Can appraisers specialize in one type of assessment?
In Quebec, certified appraisers do more than just assess the market value of homes or condos for homeowners that require it. Some of them operate in more specific sectors of real estate, such as in agriculture or industry. Some also specialize in municipal property assessments.
Here is an overview of the distribution of appraisers across different business areas:
- Private firms: 54%
- Public sector: 20%
- Municipal sector: 20%
- Financial institutions: 20%
Source : OEAQ
In addition to property assessments, some experts can also estimate the value of a business, a company or movable equipment.
What's more, did you know that training to become a certified appraiser can give you an entryway into the real estate management profession? Although the majority work in only one area, an appraiser may also be involved in property management.
Cover image : Freepik.com (drobotdean)
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