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What is an appraisal?

An appraisal is a report containing information relevant to independent property valuation, including the purpose of the appraisal, other qualifying conditions, neighbourhood conditions, property identification, data analysis, the value estimate and the effective date of the appraisal. All reports are also signed and may contain support material such as maps, charts, or photographs.

All reports will demonstrate either one or more of the three basic data-processing methodologies used to arrive at an indication of value:

The Cost Approach estimates the cost of building a new property identical to the subject being appraised, based on current prices and subtracting accumulated depreciation and adding the estimated land value. This approach is seldom relied upon as cost of vacant land in older, established neighborhoods is non-existent. Also, depreciation can also be very difficult to determine. Most financial institutions still require this approach, but it is very seldom used by a prospective buyers or sellers.

The Income Approach may be used for income-producing properties (4plex and up properties) and is based on the theory that value is the present worth of the income stream the property is capable of producing when developed to its fullest use. The net operating income from the property is capitalized into value by the appropriate method and rate.

The Direct Comparison Approach is based upon the theory that an informed purchaser would pay no more for the property than the cost of acquiring another existing equivalent property. The value estimate is based on the selling price of comparable properties.

Value Added Benefits

The cornerstone of the appraisal profession is knowledge. When you hire an Appraisal Institute of Canada designated appraiser, you are hiring a dedicated professional that will work for you. Your appraiser will provide an objective estimate or opinion of value of the described property, as supported by the presentation of relevant data analysis. Keeping up-to-date with current market trends and legal changes that may affect real estate values, appraisers offer an informed valuation.

For a directory of AIC Members, you can go to the Ontario Association of the Apprisal Insitute of Canada ’s website or to the Appraisal Institute of Canada ’s website. .

This information is provided by the London and St. Thomas Association of REALTORS®.
The information herein is believed to be accurate and timely, but no warranty as such is expressed or implied.