What is a Home Appraisal and How Much Does It Cost?
A home appraisal is an essential determinant of a home’s fair market value. The process involves enlisting an appraiser who uses their skills and experience to assess a home and its property. Standardized valuation methods are then used to derive an estimate of value. The appraisal process typically informs the appraisal cost, which varies for each home.
Why is an appraisal important?
Whether you’re buying or selling a home or refinancing a mortgage, an appraisal is an integral part of the process. An appraisal can prevent a buyer from paying more than a home is worth and making a bad investment. To a seller, an appraisal may not seem necessary, but it can prevent a homeowner from under-pricing their home at the point of a sale. Appraisals enable sellers to obtain a reasonable price that reflects a home’s fair market value.
Mortgage institutions routinely order appraisals for transactions involving residential purchases. The appraisal ensures that the mortgage institution lends an amount that is not greater than a home’s actual worth. A mortgage loan is an investment, and should a borrower default, the mortgage lender must be able to recoup any losses upon the home’s sale.
What is involved in a home appraisal?
The home appraisal process involves three stages — a home inspection, identification and review of comparable sales and the preparation of the valuation report.
The home inspection
Depending on the property, home inspections can last as little as a few hours to as long as a few days. Usually, an appraiser visits the home and examines its interior, exterior and surrounding neighbourhood. They evaluate such things as the condition of the interior and exterior, curb appeal, the home’s square footage, the number of bedrooms and bathrooms, features and amenities. The surrounding neighbourhood is viewed in terms of its appeal, proximity to negative sites, such as an airport or positive locations, such as the ocean.
Identification and review of comparable sales
Comparables, or comps, are recently sold homes within the same market having the same characteristics as the home being appraised. The appraiser reviews these homes and makes comparisons, adding value for similarities and deducting for differences.
The appraisal report
Preparation of the appraisal report is the final stage in the appraisal process. Contained in it are the home’s estimate of value, along with details of the recently concluded appraisal. Among the particulars an appraiser includes are photos of comps and the valuation approach used, a description of the property and its amenities. Depending on the client’s instructions, the information may be presented in summary or as a detailed report.
What is the cost of an appraisal?
The cost of a home appraisal in Vancouver starts at CAN$400 and increases based on several factors. Among them, the size and complexity of property, access to comparable data and geographical location. Expect to pay more if your home is relatively large and complicated. Larger homes require the appraiser to spend more time assessing. Appraisals of one-of-a-kind homes, luxury homes or homes in remote locations with little or no comparable data will be priced higher. Generally, the more time and effort an appraiser expands, the higher the cost.
Who pays for a home appraisal?
Appraisals are standard arrangements in home purchases that involve mortgage companies. Mortgage lenders, who order the appraisal, will not lend money without the assurance that an appraisal provides. But it’s the buyer who pays for the appraisal that is then either included as part of the closing cost or presented as a separate cost.
Do you need an appraisal in Vancouver?
An appraisal from a reputable appraiser can make all the difference in the sale of a home. At Adlaw Appraisals, our reputation precedes us for timely, accurate appraisals conducted by comprehensively trained appraisers. Order an appraisal online today or call us regarding any queries you may have.