Home | (250) 338-7323 Like Jackson & Associates on Facebook. Follow Jackson & Associates on Twitter. Follow Jackson & Associates on LinkedIn.

Top 6 Reasons to Get an Appraisal

An appraisal is a professional estimate of the monetary value of a property. It can be an appraisal to determine the market value of the property for purchase and sale, financing, estate or legal purposes, tax purposes, or a multitude of other purposes.

Appraisals can be formal, performed by a professional property appraiser, or informal appraisals by a real estate agent. If you are buying or refinancing a property, most lenders and mortgage guarantors will require the services of a professional appraiser.

It is important not to confuse an appraisal with a home inspection. A home inspection specifically outlines the condition of most aspects of the property—structure, utilities, grounds, sidewalks—and usually outlines what needs to be repaired. It does not, however, provide an estimate of the monetary value of the property, as does an appraisal.

Here are the top six most common reasons for obtaining a professional appraisal of your home:

1. Selling Your Home

When selling your home, an appraisal of the property’s value is an important step in coming up with a listing price. This can be one of the services your real estate agent offers however we are often called upon to complete prelisting appraisals – particularly if the property has some unique attributes.

2. Buying a Home

If you make an offer on a property, a lending institution typically requires a professional appraisal to be done on the home. The lender wants to make sure the property is worth the amount of money that will be loaned. An independent appraisal is also an opportunity for you to verify that the amount you have agreed to pay for the property is reasonable. For this reason, most buyers include a condition or clause in the purchase agreement that states the sale is contingent upon lender approval of the mortgage loan, which, in turn, is contingent upon an appraisal. In times of market uncertainty, more and more purchasers are also including conditions that states that the sale is conditional upon an appraisal determining the market value of not less than the purchase price or a percentage thereof.

3. Refinancing

If you want to refinance your home, the lending institution will require an appraisal be done on the property. As with initial mortgage loans, the point here is to make sure that the value of the collateral offered by the property justifies the refinanced loan amount you are asking.

4. Home Equity Loans/Renovation Loans

If you are trying to get a home equity loan and it has been several years since the property’s last appraisal, it is a good idea to have the property appraised, especially if property values in your area have increased. Your equity in the home against which you would borrow money is determined primarily on the current value of the property.

When borrowing money for renovations, the lender will typically also want to know that the proposed renovations will have a positive impact on the value of the property. That the ‘as though complete’ value is higher than the ‘as is’ value.

5. Estate and Legal Purposes

The transfer of wealth from one generation to another or one family member to another in the form of an estate, typically requires a valuation of the market value of the property as of a specific date (date of death, date of transfer, etc.). A division of assets for marital separation or partnership dissolution will also require a valuation as of the date of transfer.

6. Tax Assessment

In British Columbia, the assessed value of your property for taxation purposes is based on the market value of your property as at July 1 of the preceding year as determined by BC Assessment. When the assessment roll is completed, the municipality sets the ‘mill rates’ which in turn determine the property tax levy for your property. Assessment notices are released in early January and homeowners/property owners have a set period of time to evaluate the assessment and appeal it if necessary.

 

If you have any questions about house appraisals and if it is right for your, contact us today.

Affiliations and Accreditations