During a real estate transaction, having a home appraised is an important step for both the buyer and the seller. This step ensures that the asking price truly reflects the condition of the property and the real estate market. It should not be neglected.
Want to have your home appraised? To help you avoid mistakes, we tell you everything you need to know about real estate appraisals.
Hire a professional to determine the market value of your home
A real estate appraisal is an objective estimate of the market value of a property at a given time. There are several elements to consider when determining the value of a property, such as:
- Location;
- Living area;
- Condition of the property;
- Current real estate market conditions;
- Etc.
The best way to estimate the value of a property is to consult an expert who knows the market. Depending on your project, two professionals can help you: a real estate broker or a certified appraiser.
The real estate broker to determine the sale price of a property
A real estate agent will evaluate the price of your home for free if your ultimate goal is to sell it. He will also guide you through the marketing process. Ultimately, once your property is sold, you will need to pay the agent the commission negotiated in your listing agreement.
A certified appraiser for an accurate estimate of your home's value
In some cases, it is essential to go through a licensed appraiser. For example, if you are refinancing with the bank, or if you simply don't want to be accompanied by a broker when you sell your property.
A certified appraiser must be a member of a professional order. In Quebec, this is the Ordre des évaluateurs agréés du Québec (OEAQ). This guarantees that you are dealing with a trained person whose practice is supervised.
To become a member of the OEAQ, certified appraiser candidates must first:
- Obtain a university degree in administration;
- Complete a supervised internship;
- Complete a training course on ethics and standards of practice;
- Pass an entrance exam.
The benefits of a certified appraiser
A certified appraiser is the go-to professional when it comes to determining the true value of a property. And with good reason, as there are many benefits to hiring this professional.
Discover the benefits of using a certified appraiser:
Quality of service regulated by the Order
As mentioned above, all certified appraisers must comply with the standards of practice and the code of ethics to which they have been trained by the OEAQ. This is a guarantee of quality service for the individual.
An objective, unbiased professional
A certified appraiser cannot personally profit from his or her work. They do not receive a commission for their work and the market value of the house does not affect their remuneration. All the more reason to trust an appraiser.
The appraiser's report
After his analysis, the appraiser will provide you with a more or less detailed report, depending on your request. This document is an invaluable tool in the sale of a property, proving that the asking price is realistic and in line with market conditions.
Two avenues of recourse
If, despite the standards of practice and code of ethics, you encounter a problem when working with an appraiser, you have two tools at your disposal:
- Disciplinary recourse, to lodge a complaint with the syndic;
- Civil recourse, thanks to the compulsory professional liability insurance.
Keep control of your appraisal
When you apply for a mortgage loan for a purchase, refinance or renewal, your lender will probably require an appraisal from a licensed appraiser. You will still be responsible for the cost of this process, even if your financial institution hires the appraiser.
However, we recommend that you negotiate with your bank to hire the appraiser of your choice. Otherwise, you will not receive the report. In fact, even if you are the one who pays, you are not considered a client if you are not "the one who needs his services". (Art. 14 of the Code of Ethics)
Don't rely on municipal assessment!
Some people question the value of using a professional to determine the market value of a property and suggest relying solely on the municipal appraisal. However, this is not the way to go.
In fact, it is important to remember that municipal assessments are only done every three years. A house can gain or lose value in that time. So, it is imperative to have a current appraisal.
How does a property appraisal work?
A proper property appraisal involves 3 steps:
1. Physical inspection of the property
Unsurprisingly, the appraisal begins with a physical inspection of the property, during which the appraiser or one of his assistants checks the dimensions of the house and grounds. The inspection tour, which assesses the general condition of the property and determines the type of work that needs to be done, lasts between 45 and 60 minutes. It may include an interview with the homeowner.
2. Analysis
Following this inspection, the appraiser analyzes the various elements gathered to determine the property's value. The appraiser uses a combination of three methods:
- The cost method;
- The comparable method;
- The income method.
In this way, he can be more confident of the validity of the result obtained.
3. Writing and submitting the report
The final step is to write the report. This can be a summary of the valuation or a more detailed report detailing all the elements that influence the value of the property. In either case, the report must include:
- Information about the property;
- The purpose of the appraisal;
- A definition of the value being sought;
- Any caveats limiting the scope of the appraisal;
- The date of the appraisal;
- The appraiser's signature.
When should I have my home appraised?
There are many situations in which having the market value of your property appraised can be very useful. In this article, we have focused on the value of an appraisal during a real estate transaction. But an appraisal is also necessary when refinancing a mortgage or dividing a family estate.
Looking for an appraiser to determine the value of your property?
XpertSource.com can help you find a certified appraiser. When you tell us about your project, we put you in touch with qualified resources for FREE. Simply fill out our form ( it only takes a few minutes ) and we will connect you with professionals.
