More than ever, appraisers are becoming as much a part of the home buying and selling process as lawyers, realtors, and home inspectors. Robin Jones, President of Appraisal Institute of Canada Ontario Association says it’s a result of homeowners and buyers wanting an objective perspective on the value of the house. “An appraisal is beneficial because it gives you the opportunity to make sure you’re not paying too much when buying a property, or asking too little when selling a property,” he says.

What appraisers do

The role of an appraiser is to give an impartial, independent, and unbiased opinion of a home’s value at a specific point in time. Generally an appraiser is hired to conduct an appraisal for mortgage financing — when the negotiations on the purchase price of a property have been completed.

However, Jones says he’s also getting hired prior to negotiations for a second opinion as well as to see what the property might be worth after renovations to allow for special advancement of funds to permit that kind of renovation.

Understanding market value

Gathering past sales data and other key sources of real estate information is a key role of a professional appraiser. Jones says that appraisers research sources other than the Multiple Listing Service® (MLS®) to consider undisclosed transactions and private sales. The appraiser is highly qualified to interpret and analyze this data to identify a reliable market value for their client.

 “Those in the housing market — buyers and sellers — don’t have access to all the information.”

The location of a property is generally the most important factor. Houses that are similar in size, configuration, and condition that have sold within the neighbourhood are the key comparables considered.

Appraisers also consider the condition of major components such as kitchens, bathrooms, windows, and to a lesser extent furnaces, air conditioners, insulation, and other lower-cost items.

“All those aspects of a house that a typical buyer would consider, an appraiser will take into account in the value of the property,” says Jones.

If any of those areas of the home look like they’re in dire need of a repair or renovation, it has the real potential to change the value of the home.

“A $6000 furnace on a million dollar home isn’t as significant as when you are in a smaller community, where a $6000 furnace on a $150,000 home is more of a consideration,” says Jones. “Factors that affect value are not the same in every neighbourhood, and it is our job to determine which factors are most important in a particular marketplace.”

 “Those in the housing market — buyers and sellers — don’t have access to all the information.”

Appraisers are trusted advisors

Homeowners and buyers are becoming savvier when it comes to the housing market, and Jones says the demand for professional appraisers is increasing.

“People are becoming more informed in the marketplace,” he says. “I’m getting more calls than I did four years ago to give buyers and sellers all the information they need to make a decision about a property. It makes good financial sense.”