Do you know your property’s market value? If you’ve owned it for many years or recently made renovations, its value had likely changed since you purchased it.
Knowing your home's market value is highly beneficial, but relying solely on the municipal appraisal isn't enough. A professional real estate appraisal is crucial.
There are many situations where knowing your property’s value is useful. Here are a few examples.
1. When selling a property
Selling real estate is undoubtedly the best-known reason why it's important to assess the value of a home. However, when listing a property for sale, many owners struggle to determine the appropriate price.
Sellers working with a real estate broker can rely on their expertise to set the optimal selling price. However, for those managing the sale independently, estimating the right price can be quite challenging.
In such cases, hiring a certified appraiser before listing the property can be helpful. An appraiser's knowledge and valuation techniques provide an accurate market value for the home, which can then be used to set and justify the asking price.
If you choose to set the price yourself, be cautious about relying on municipal appraisals, as they might not reflect your property's true market value.
2. When purchasing a property
As a buyer, you typically won’t be responsible for appraising the property yourself. Instead, you’ll likely follow the advice of your real estate broker, if you have one, and make an offer based on their recommendations.
However, appraisals are still important in the purchasing process. Financial institutions use them to verify that the price you're offering is not excessively high compared to the market value. This is particularly relevant when the loan amount exceeds 80% of the property's value, which usually requires mortgage loan insurance.
In a competitive market with frequent overbidding, lenders are extra cautious to ensure that the loan amount is reasonable. Before approving a mortgage, a bank may hire a certified appraiser to assess the property's value. If the loan request significantly exceeds the appraised value, the bank could require a larger down payment or refuse the loan altogether.
3. When refinancing your mortgage
A third situation that may require a property appraisal is when applying for mortgage refinancing whether to consolidate debts or funds other projects.
Since July 9, 2012, the federal government has permitted homeowners to refinance up to 80% of their home’s value. An appraisal, ordered by the bank, will verify the property’s value and determine the maximum loan amount you can receive.
The amount you can borrow will, of course, be influenced by the outstanding mortgage balance at the time of refinancing.
4. In the event of divorce or separation
When two spouses decide to go their separate ways, the family patrimony must be divided fairly. Indeed, when dividing family assets, the expertise of a professional appraiser is essential. The family house can then be sold and the proceeds will be split, or one spouse can buy out the other’s share to become the sole owner.
In the buyout scenario, a certified appraiser's involvement is crucial to accurately determine the home's value, and the amount required for the buyout. Relying only on the municipal value of the home is insufficient in this situation.
5. Following a death
Before settling an estate, executors must divide the family assets. The surviving spouse is legally entitled to half of the estate. The executor needs to inventory the assets and obtain a professional appraisal of the house to determine its value for distribution between the spouse and the heirs.
Looking for an expert to help you determine the market value of your house?
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.
