What is an appraisal?
An appraisal is an unbiased estimate of market value provided by a professional accredited with the Appraisal Institute of Canada (AIC).
Why do I need an appraisal?
Buying or selling real property can be one of the largest financial decisions you will make in your life. An appraisal may be required to:
- Obtain a professional opinion of value for mortgage or lending purposes.
- Ensure that the purchaser does not pay more for a property than it is worth.
- Determine the correct selling price when selling a property.
- Provide investors with information upon which to base investment decisions.
What is the difference between an appraiser and a realtor?
Real Estate Appraisers provide a market value estimate of your property based on an intensive analysis of the local real estate market and comparable sales that can be verified by public record. A realtor will provide an opinion of value (market analysis) to establish an appropriate listing price to market your property.
What happens during the inspection?
The appraiser will make a physical inspection of the property, although briefer than a formal technical or building inspection. They will walk the outside of the property as well as inside any buildings and are required to take pictures of both the outside and inside. The appraiser will make notes of the property and improvements (i.e. physical characteristics, interior/exterior finishes and mechanical systems, quality of improvements.)
How long will it take to receive my appraisal?
Timelines for appraisals vary depending on how busy the appraisers are. Commercial appraisals typically take 2-4 weeks for completion once approval and deposit (or full payment) is received. Some properties are complex with multiple components or unique characteristics which may require extended timelines to collect the appropriate data needed to estimate market value.
How is the value of a commercial property estimated?
There are three basic approaches to valuation which are accepted in the appraisal of real estate, the Direct Comparison or Market Data Approach, the Income Approach and the Cost Approach.
The Direct Comparison Approach involves comparing the subject property to the sale, listing or offered prices of properties which are judged to be comparable to the subject. Adjustments are made to the prices of the comparable properties to reflect differences.
The Income Approach is used to appraise income producing properties and involves the measurement of the present value of the future benefits of property ownership. Under this approach the property’s anticipated income stream and reversion are capitalized into a present value using a capitalization rate derived from the analysis of sales of similar investment properties.
The Cost Approach is based on the premise that market participants relate value to cost. Under this approach the value of the property is derived by adding the estimated value of the land to the current replacement cost of the improvements less the amount of depreciation from all sources, i.e. physical, functional and economic.
How much does an appraisal cost?
How much an appraisal will cost varies depending on its complexity, size, location, etc. We can promptly provide a quote.
Is “Location, Location, Location” an appraisal term?
Location is a fundamental component of a property that will significantly impact the ultimate value.
What is Market Value?
The “Canadian Uniform Standards of Professional Appraisal Practice” (2020 Standards), defines Market Value as:
“the most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and the seller each acting prudently, knowledgeably, and for self-interest, assuming that neither is under duress.”
What is the meaning of Appraiser Qualifications?
Designated members or the Appraisal Institute of Canada have completed AIC’s rigorous curriculum, examination and experience requirements. AIC designations are highly respected and recognized worldwide.
The AACI designation (Accredited Appraiser Canadian Institute) is awarded to individuals who have completed the AACI program of studies and fulfilled all professional requirements of the Appraisal Institute of Canada.
CRA members are qualified to value single, undeveloped residential dwelling sites and dwellings containing not more than four self-contained family housing units.
What is assessed value?
BC Assessment (BCA) assesses properties every year for their current value based on the standard Provincial system for determining annual property taxes. The Assessed Value reflects market value for the fee simple interest in the property as estimated by the Assessment Authority as of the valuation date (July 1st of each year) based on the physical condition of the land and buildings as of October 31st of that same year.
Ideally a property’s assessed value should be the same as market value. However, the Assessment Authority’s valuations are based on mass appraisal techniques and the BCAA’s inspection data may be several years old. Accordingly, the estimate of actual value may be less precise than a full appraisal.