Looking into Renovating Your Home? Consider Having an Appraisal Performed Before You Start

December 17th 2004
Looking into Renovating Your Home? Consider Having an Appraisal Performed Before You Start

Here are some pointers from the Appraisal Institute of Canada

What is my property worth?

This is the most common question asked and the answer is best obtained by having an independent appraisal completed. An appraisal consists of a thorough property inspection, location analysis and an investigation of relevant market data, and equating that information into an indication of market value for the property. Your property's value is often the cornerstone of your financial well-being and consideration should be given to having its value established by an independent professional. - Jerry Kirkland, AACI, P.App

We are considering renovating and would like to know what items will provide the best return upon sale?

Renovating is a complex area and every situation has to be looked at individually. The best return on resale is cosmetic items such as painting and decorating where there is limited capital outlay, according to the Renovation Payback Study completed by the Appraisal Institute of Canada.

Care should be taken not to overly personalize the renovations and adversely affect the property's function or market appeal. Be particularly careful when renovating if the property is in the upper range of value for the area and involves a large capital outlay. Remember, Location, Location, etc. - Jerry Kirkland, AACI, P.App

When is the best time of the year to be in the real estate market and what are the most important issues involved in obtaining my best deal?

The time of year depends on whether you're a buyer or a seller. Typically the best time of the year to sell is the summer, when the number of buyers is usually the greatest.

Conversely, from a buyer's standpoint, the best price can often be negotiated in the winter, when the least number of other buyers are in the market. You should also be aware, however, that property inventory is usually at its lowest in the winter and you may not be able to get a good look at the property's exterior, in particular, the landscaping.

One consideration is to sell in the summer, rent during the fall and buy in the winter, this approach would, however, involve appreciable costs and frustrations around two moves.

Aside from the time of the year, buyers and sellers have to educate themselves for one of the most important investments of their lives. Sellers should seek the most informed and unbiased opinions of the market value of their property through qualified appraisals. In addition to the appraisal could be provided to the prospective buyer to assist in formulating an agreement and for financing purposes.

Buyers should always include on offers to purchase the phrase "subject to the appraised value being equal to or greater then the agreed purchase price". You should insist on obtaining the appraisal before closing and, if the lender doesn't need an appraisal, have one completed for your own security and peace of mind. -Jerry Kirkland, AACI, P.App

What is the difference between a real estate appraiser and a real estate agent?

Real estate agents are professional salespersons. They typically will provide a market analysis when establishing a list price on a home for sale. Generally, no fee is charged for this service, but a commission is paid by the vendor when the home sells.

A professional real estate appraiser specializes in providing opinions of value of various types of property. They charge a fee based on the type of the property, complexity of the property and purpose of the appraisal assignment. This fee is not based upon a predetermined value estimate and therefore an appraiser can provide you with an objective, independent value of your property.

All members of the Appraisal Institute of Canada are required to conform to the Canadian Uniform Standards of Professional Appraisal Practice. They are objective real estate analysts and reporters. Ethically, no appraisal assignment can be accepted contingent upon a certain pre-determined value, minimum or maximum value direction in value. -Deana Halladay, CRA

We are considering selling our property and are wondering, can an appraiser help us price it to sell most effectively?

Definitely. Although pricing your property is only one component in marketing when it comes to selling real estate, pricing is the most important aspect. Where you set your price depends on your goals and objectives and how you wish to price your property may alter when or if you want to put your it on the market.

Pricing is an art, not a science and much intuition is involved. Having an qualified real estate appraiser/advisor to assist can be valuable as you make your pricing decision. A qualified independent real estate appraiser/adviser is best equipped to provide detailed information and the individual with the best information will be the best prepared to achieve maximum value. An appraiser/adviser can provide a written detailed appraisal of the property which includes: a neighborhood analysis (proximity to churches or schools for residential customers, proximity of competitors and other major attractions for the commercial clients); trends in real estate pricing in the neighborhood; a property description and analysis, market trends in general; a comparison of the subject to the most recent relevant sales transactions along with competitive listings, in the marketing area.

The appraiser/adviser can also recommend any basic repairs or cosmetic upgrades that maybe advisable before exposing the property to the market and obtain the maximum return. An appraiser/advisor may also advise whether or not it would be in your best interest to put your property on the market, at this time. Based on your objectives (a quick sale, maximum return, etc) it may not in your best interest to go to market at a given time. An appraiser/advisor will let you know when is the best time for you to sell your property.

Finally, and most importantly the appraiser/adviser can recommend the most effective list price to obtain the maximum value. A qualified independent real estate appraiser/advisor works for you. They are well versed in all aspects of real estate. - Jerry Kirkland, AACI, P.App

For more information, please feel free to visit the Appraisal Institute of Canada's website at www.aicanada.ca/.