What Can Impact the Cost of a Home Appraisal
Whether you are buying, selling or looking to refinance your home, you will most likely need a home appraisal.
While an appraisal fee is something you will need to add to your budget or closing costs, the good news is the cost of a home appraisal shouldn’t be a deal breaker.
A home appraisal is a key part of the financing portion of any new or refinanced mortgage or loan agreement. It is something most financial institutions will insist on before releasing funds.
It’s worth knowing that some factors can impact your final home appraisal costs. According to the Appraisal Institute of Canada, the house appraisal cost is generally determined by the complexity of the review and the length of time it takes to complete it. An appraisal fee is NOT determined by the declared value of the property being appraised.
Below, we’ll explore some of the factors that may cause your appraisal fee to be higher than average. Read on to find out why appraisals are important, who pays for them and how much you are likely to pay in British Columbia.
What is an Appraisal, and Who Pays for it?
A home appraisal is a legal document that determines fair market value for a property. The appraisal process includes an inspection of the property and research of comparable properties in the local area by a qualified professional.
Appraisals are not only important for the house-buying process, but they are also used for financial loans, property tax appeals and some legal processes.
During the home appraisal process, the appraiser reviews the structure of the property, including size, number of rooms, exterior amenities and the lot the property sits on, amongst other things. For more information on what a home appraisal inspection consists of and how value is determined, see our previous blog post – ‘Home Appraisals – What They Look For.’
Usually, the buyer will be responsible for the cost of home appraisal with the fee considered part of the closing costs. However, if the appraisal is for refinancing, the current owner will be required to pay. Occasionally, a seller will foot the bill if they are looking to incentivize the sale or demonstrate the potential for subdivision of the plot.
If you need to hire an appraiser, it is acceptable to get quotes from several appraisal companies, especially if you have a particularly large, unique or complex property. Look for a company like D. Fritz, with an experienced and qualified professional team of appraisers that is familiar with your community.
8 Home Appraisal Cost Factors
According to Nesto.ca, the average cost of a house appraisal in BC is usually in the region of $350 to $500 plus tax, though there are several reasons why your final fee may end up higher than that. Factors that can increase the final bill are generally related to the time and effort required to produce the appraisal report and include:
- Size of property – Generally, the more time an appraisal takes the higher the cost can be, so it stands to reason that a larger property may result in a higher fee than a smaller one. For example, a 6,000 sqft home with a large garden will take longer to review than a 1,000 sqft condominium.
Equally, a multi-family property will cost more to appraise than a standard single-family home.
- Complexity/detail of property – A home with intricate architecture or an unusual layout will take longer to appraise and will have fewer market comparables to refer to. Generally, any additional time spent assessing complex homes will lead to an increased fee.
- Location – Easily accessible homes in residential communities are likely to cost less to appraise than those that are hard to reach. It is harder to find comparable recent sales for homes in more remote areas, so additional research may be required to conclude the correct valuation. Additional travel expenses may also be added if the home is outside the appraiser’s usual area.
- Season – Luckily it doesn’t snow too often on Vancouver Island, but severe weather or heavy snow can increase the time it takes to perform an appraisal and therefore impact the cost.
- Condition of the home – If the house has any structural issues, obvious signs of damage or disrepair or is extremely cluttered, it will take longer to perform the appraisal than it would in a well-kept property.
- Unique features – Is the property on the waterfront with a dock attached? Does the land have subdivision potential or is the home designated a heritage property? Any ‘out of the ordinary’ homes may take longer to review and compare to ensure the final report is accurate potentially resulting in a higher fee.
- Additions and upgrades since previous appraisal – If significant additions, such as an extension, home lift or creation of a legal suite, have taken place since the property was last appraised, it will take longer to assess. This is because the appraiser has to inspect any upgrades thoroughly to determine their impact on the final valuation.
- Short notice requests – Sometimes appraisals are needed very quickly to accommodate an urgent purchase and avoid closing delays. Some appraisers may charge an additional fee for short notice or fast turnaround reports.
How to Minimize Additional Costs for Home Appraisals
There are some things you can do to help your appraiser complete a timely assessment and reduce the chances of additional fees. For example:
- Plan ahead – but not too far. Plan early enough that you avoid rush fees and have time to shop around for your appraiser. But remember, an appraisal report is only considered to be accurate for about 3 months, so don’t do it too soon and risk having to get it re-done.
- Be prepared – As the homeowner, you can help make the appraisal process faster by providing all relevant and required information about the property at the start of the assessment.
D. Fritz for Appraisals in Victoria, BC
If you need an appraisal for a home in southern or central Vancouver Island, look no further than D. Fritz Appraisals Inc. Our experienced, professional team has over 40 years of experience in delivering expert appraisals throughout the area.
Whether you need an appraisal for a home purchase, re-financing or settling an estate or division of assets, our team will be glad to help. Call us today, and we’ll be glad to give you a quote for our appraisal service.