Home Appraisals are often a critical part of getting a mortgage and buying a home in Canada – not to mention that getting a value on your home can be useful for many other reasons. Here are a few questions we often get about the home appraisal process.
What Exactly Is A Home Appraisal?
Simply put, a home appraisal is an inspection done on your home which provides an estimate of the home’s true value.
Why Would I Need A Home Appraisal?
Appraisals are obtained for a variety of reasons. A homeowner will need to know the value of their home for financial reasons such as to procure a loan or a second mortgage, preparing for retirement, and in the case of a dissolution of marriage and division of assets.
Probably the biggest reason for getting a home appraisal is for real estate purposes. For instance, a homeowner will get a home appraisal when they’re considering selling their home or when a buyer is applying for a mortgage.
Why Would My Lender Require A Home Appraisal?
Home Appraisals are required by lenders in order to make sure they can recoup the same value they give you for a mortgage in case you default and they need to sell the home to cover what you didn’t pay.
How Much Does A Home Appraisal Cost?
Some REALTORS® will offer a general estimate and appraisal on a home for free or a very small fee. However, if you’re considering selling or buying a home with them, often professional appraisers will charge anywhere from $200 up to $400 or more. This fee depends on the size of your property, time invested, and other details that may require more inspections in the home.
How Does The Appraiser Come Up With The Value?
The first thing an appraiser will look at when estimating a home value is what similar homes in the same area have sold for recently. These are often referred to as “comps” as in “comparable sales”. This should give the appraiser a good starting cost point. After that, they will look at the actual home. Is it in need of repairs? Has it had any recent updates? Is there a built-in suite or need extra landscaping? All of these will determine a more accurate value of the property.
What Happens If The Appraisal Comes In Lower Than The Selling Price?
If the home you’re looking at buying appraises at less than the selling price, often your lender will only offer a smaller mortgage to match the appraisal price. Again, this is so they can recoup their investment if they need to.
Appraisals can be contested if you don’t feel it’s accurate. This is where a REALTOR® can come in handy as they have access to the comps and can delve into why those properties were considered comparable. REALTORS® are also used to seeing properties and the areas they’re in. They can offer more information to the appraiser to help raise the appraisal price.
How Can Pemberton Holmes Help?
As we said above, REALTORS® can be helpful in obtaining an accurate appraisal. At Pemberton Holmes, we have a long history of assisting people in buying a home in Victoria, BC and all around Vancouver Island. We know the ins and outs of everything that goes along with it. Contact us today for more information on appraisals or any other Real Estate questions you may have.