FREQUENTLY ASKED QUESTIONS
What is the difference between a formal appraisal and a Letter of Opinion provided by a Realtor?
A formal appraisal report completed by a designated member of the Appraisal Institute of Canada (AIC) is generally the only type of valuation document accepted by mortgage lenders, government entities and the court system. Appraisal reports are normally on an "as is" current value basis. However, retrospective (past date) values are often required to determine the value of a home at the date of separation, date of death or date of a dwelling's conversion to an income producing property or principal residence. Your lawyer and/or accountant can advise you whether a current or retrospective value is required.
A Letter Of Opinion is a written statement provided by a Realtor with an opinion of the subject property's market value. These letters are typically a signed one-page letter on brokerage letterhead and do not carry the same authority as a formal full appraisal. A Letter Of Opinion is is not based on the same depth of research and analysis, is more likely to be subject to bias and is normally used only as a preliminary step to formal proceedings.
Realtors provide Letters of Opinion or CMAs (Comparative Market Analysis) as a method of developing relationships and earning future business. As such, these opinions are more likely subject to bias or conflict of interest concerns. As a general rule, you will require a formal appraisal if the valuation is for marital separation (division of assets), estate settlement (probate) or capital gains calculation purposes.
How do you determine the market value of my home?
The residential valuation process relies mainly on the Direct Comparison Approach which compares the attributes and features of the subject property with recent sales of similar properties in the surrounding neighbourhood. If the subject property is larger, superior or has a contributing feature that the comparable does not, the comparable sale price is given upward adjustments. Conversely, if the subject property is smaller, inferior or is missing a contributing feature that the comparable has, the comparable sale price is given downward adjustments.
Following completion of the Direct Comparison Approach, the adjusted values of the comparable sales are analyzed and reconciled into an estimate of value for the subject property. All of our formal appraisal reports are completed by members of the Appraisal Institute of Canada (AIC) and are in compliance with the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP).
How long does it take to complete the appraisal?
The appraisal inspection for most residential homes takes 20 to 40 minutes, depending on the size, layout and condition of the property. The inspection is just a small part of the appraisal process, with the vast majority of the work taking place back in the office. The report is prepared in pdf format and is typically available by email within two business days.
Please note that, in most cases, we have not researched the property before the inspection and cannot give an accurate valuation without reviewing and analyzing the most recent available comparable sales. Values do fluctuate, sometimes rapidly, and there may be recent sales affecting neighbourhood values that we are not aware of until we do this research. A good appraiser will not give a verbal estimate until the research has been completed and fully analyzed.
How do I get ready for an appraisal inspection? What can I expect?
During the appraisal inspection, the appraiser will be focused on gathering all of the information necessary to complete a detailed report and develop an accurate value estimate. The appraiser will take notes about the layout, finishes and condition of the home as well as some basic information about the construction and mechanical systems. Upgrades and renovations will be noted as well as any maintenance or repair items that should be considered. Photographs are taken for use in the appraisal but, generally, the appraiser is looking at the overall condition of the home rather than your daily housekeeping. An exterior inspection is also completed, including a sketch and measurements of the outside walls.
Please note that the appraiser must have access to all rooms in the house as well as the garage, utility area(s) and electrical panel. Please have available the necessary keys to open any locked rooms and, if the property is tenanted, please ensure that we have the tenant's permission to take photographs. If you have a survey, or the original builder's brochure/plans that show the model name and square footage of the dwelling, this can be helpful. We will photograph any such documents and leave you with the original. If you wish to make a list of any recent updates or renovations, that can also be helpful.
What is your service area?
Our service area covers the suburban areas of the east GTA from Scarborough, Markham and Stouffville through the Durham Region (Pickering, Ajax, Whitby, Brooklin, Oshawa, Courtice, Bowmanville and Newcastle) and into Port Hope, Cobourg and Peterborough. Please feel free to contact us to see if we can provide service in your area.
How much does the service cost? When is payment required and what forms of payment do you take?
The cost of an appraisal varies depending on the type of appraisal assignment and the property being appraised. You will be provided with a quote once we receive your order and before proceeding. Payment for appraisal services will be required at the time of or before the property inspection and can be made by cash, certified cheque, bank draft or Interac email money transfer.
Who is considered to be the appraiser's client?
Appraisers work on a confidential basis with their clients and have a fiduciary responsibility similar to that of other professionals such as lawyers and accountants. It is important for all parties to understand who the appraiser's client is.
When an appraisal is completed for mortgage lending purposes, the appraiser's client is the lending institution, regardless of who paid for the report. The lender has requested the appraisal to assist in making a lending decision and the lender provides instructions to the appraiser as to how the report must be completed and distributed.
With other appraisals, such as for marital separation, estate settlement or capital gains calculation, the homeowner or estate trustee orders the appraisal, provides instructions and is usually considered to be the appraiser's client.
Under the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) of Appraisal Institute of Canada (AIC), any discussion or disclosure of information contained in an appraisal must be done only with the written consent of the client. The client and intended user(s) identified in the report are the only parties that can receive a copy of the appraisal and written authorization must be obtained from the client before release to any third party.