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choosing the right real estate appraisal company

Get to Know your Home Appraisal Company

What to Look for in a Home Appraisal Company

Looking for a Home Appraisal Company in Victoria, BC? Here’s a Quick Guide to Help You Decide Who to Hire

If you own your own home, there are four main reasons why you might be looking to hire a property appraisal company instead of going through the banks:

  • you are planning on selling your property and want to know how much it’s worth;choosing the right real estate appraisal company
  • you are looking into refinancing your home and want an idea of its current value;
  • you need to start dividing assets amongst family members or a former spouse; or
  • you want a second opinion to compare with what a previous company gave you.

In any of these situations, a property appraisal company can help, and it will be up to you to hire the right company for the job. (This is unlike when you’re buying a home and paying for a property appraisal to satisfy the bank lending you your mortgage – in this case the bank has a list of companies they work with).

So, when it’s up to you, how do you know what property appraisal company to hire? Start with our quick guide to choosing a home appraisal company. Here are some of the key things to look for:

Knowledge of Your Property Type

Before anything else, be sure you’re only considering real estate appraisal companies that specialize in your property type. Some companies specialize in commercial buildings, while others specialize strictly in residential properties.

Depending on where you live, there may be companies that further specialize in condos or heritage buildings over detached homes, so double-check you’re looking at companies that can meet your needs in this regard.

For example, if you are looking for an appraisal on two acres of farmland, someone specializing in Victoria’s downtown core might not be a good fit. If you are planning to list a three-bedroom house with a suite in Oak Bay, look for appraisal companies with expertise in that kind of property.

Knowledge of Your Neighbourhood

Confirm the appraiser’s knowledge of your specific neighbourhood. The appraisal company you hire should have a complete understanding of the local region, including its facilities, amenities, property types, and recent home sales and prices.

They should know about potential rezoning and redevelopment set to take place in the neighbourhood, as well as any future investments taking place or ongoing efforts to make the neighbourhood even more desirable.

Is the neighbourhood set to densify in the next 10 years? Is a major transportation upgrade destined to arrive? Are new schools and hospitals being built nearby? These are all things a knowledgeable property appraiser will be able to tell you, and factor into their appraisal report.

Longevity in the Industry

A good indicator of whether a company has some or all of the attributes listed above is how long they have been in the industry for. A company with decades of experience speaks to their reputation and knowledge of the market. D. Fritz Appraisals is one of Victoria’s longest standing appraisal firms, with more than 40 years of experience in all aspects of the real estate industry in Victoria, BC. We would be happy to show you how we got there!

Word of Mouth Recommendations

If your neighbours, colleagues, friends, or family have recently gone through the home appraisal process, ask them who they used and if they would recommend their services.

Online Reviews

Likewise, use things like online reviews to help you decide on which company will be best at meeting your home appraisal needs. Online reviews often highlight things like the company’s level of customer service and timeliness of correspondence – two major factors when timing is of the essence in the real estate game.

Credentials & Education

Ask an appraisal company about their staff’s education, certifications, and amount of insurance liability. Look for a company whose appraisers are certified with the Appraisal Institute of Canada (AIC) and professionally insured for liability according to the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP).

Level of Experience

Ideally the property appraiser you hire will have extensive industry experience, having worked as a mortgage broker, real estate agent, or otherwise in the past. It’s encouraged to evaluate the appraiser’s experience level and ask them for a short biography (often provided on the company’s website in the About Us section) and a list of two or three references (testimonials) from current or previous clients.

Level of Support

Confirm with the appraisal company what is included in their services, so you know exactly what you are paying for in the final report. If you have questions about the appraisal process along the way, and care to ask the appraiser for tips on how to improve the valuation, find out beforehand if this level of service is to be expected. Also make sure a copy of their report is included in the services you are paying for! This is especially important if this is your first time undergoing the process of having your property assessed.

Methodologies Used

Once you’re satisfied with all the above, the last step is asking the appraiser about their appraisal methodology. Find out what steps they take to determine the value of your home. Most appraisers start with their in-house database of recent sales and market trends, checking to see if prices are rising or falling. Next they supplement that data with data from the MLS (Multiple Listing Service), and then do a site visit of the property.

Up Next: Home Inspections vs. Home Appraisals

The property appraisers at D. Fritz Appraisals would be happy to provide you with more details on our real estate appraisal services in the Victoria region of Vancouver Island. Contact us today to learn more. We specialize in real estate appraisals for all situations, such mortgage refinancing, new construction, division of assets, and estates.

 

 

Home Appraisals - onsite vs online

Home Appraisals vs Online Home Value Calculators

Home Appraisals and Online Home Value Estimates Are NOT the Same Thing

On-site vs. Online: Proper Home Appraisals Need to be Done in Person

With so many types of transactions solely being handled online these days, it’s tempting to want to complete your required home appraisals entirely online and leave it at that. Online home value estimates, however, are not a substitute for a house appraisal carried out by a licensed real estate appraiser.

Online home value estimators can sometimes come close to providing the right answers, but they will never completely beat out the accuracy of an on-site visit by a professional. Nothing can beat the human touch when it comes to home appraisals! The following blog post explores why this is.

What is a Home Appraisal?Home Appraisals - onsite vs online

A home or house appraisal is a third-party report written by a professional appraiser who visits the property and does market research to analyze how much the house is worth in today’s market. An appraisal report informs homeowners, home buyers, and mortgage lenders on the market value of the home.

What is an Online Home Value Estimator?

An online home value estimator is a website or online tool that gives you a rough idea of what your home is worth, based on things like its address, square footage, lot size, and age. There are several competing websites and online platforms and tools offering home value estimators or home value estimating services. Sometimes these online services are referred to more formally as Automated Valuation Models (AVMs), or more casually, home value calculators.

There are online home value estimation tools for homeowners, realtors, and also for banks. While there are free online tools available to homeowners, the Realtors Property Resource is only available to real estate agents. Furthermore, some B2B home valuation services require a subscription, making them suitable for financial institutions and other companies who have recently started providing home estimates to accompany their other financial services.

Each of these tools, however, are likely to provide slightly varying results making them difficult to rely on for any definitive answers.

There are websites that provide home value estimations just by searching an address, while others may provide an estimate only upon request. The most basic ones are featured front row centre on real estate agent and mortgage broker websites. They start by simply asking you “What is your home worth?” or invite you to “Find out how much your house is worth.”

To use the tool, you simply enter your address, and then a few other property details, such as the age and type of property you have, how many bedrooms and bathrooms, and how big the lot size is.  Many of the tools ask you for your contact details or ask you to create an account so they can follow up with you. These free online calculators are essentially marketing tools but can provide a nice starting point for homeowners just starting to think about listing.

How Online Home Value Estimators Work

Online home value estimators provide estimated values for properties based on algorithms and calculations using different sets of property data, taken from MLS and BC Assessment, for example. They look for patterns and relationships between stored property values and the information you have input. These tools often look at past property tax records, what nearby homes have sold for recently, and the average price per square foot in the area.

Home value estimators are limited in what they can estimate, relying solely on the user’s answers to a handful of generic questions. They may or may not be able to calculate the desirability of the city the properties are located in. As such, they should not be considered as a substitute for formal home appraisals. This is because they are incapable of carrying out an up-to-the-minute comparative market analysis on your property, nor do they have intimate, in-depth knowledge of your local area like a local real estate appraiser would have.

Limitations of Home Value Estimators

Home value estimators can give you a rough estimate of what your home is worth, but they cannot account for things like:

  • unique features of a home
  • recent repairs or renovations
  • add-ons or upgrades
  • local markets
  • neighbourhood charm
  • nearby attractions and amenities
  • future amenities
  • quality of the views
  • how well-cared for the home is

In contrast, a licenced property appraisal professional looks at all of those things and more to deliver a thorough, trustworthy and confidential appraisal.

The Takeaway

As technologies get better and better and more data becomes available, the number of companies offering online home value estimates may grow. As it stands, although online home valuation calculators are not thorough or robust enough to replace a human appraiser, they are still commonly used to get both high and low ratio mortgages approved.

A good example of this is CMHC’s auto valuation tool called Emili. Described by the CMHC as “a groundbreaking on-line mortgage loan insurance [decision-making] system,” Emili is essentially a database of properties that uses different factors as way of determining what a house is worth.
Most of these online estimators will highlight the importance of meeting with a real estate professional or home appraiser to receive an in-depth, in-person appraisal of the property that factors in local markets.

A Homeowner’s Next Steps

If you require a general sense of how much your home is worth, an online home value estimator may be a good place to start as they are free and fast.  Some realtors, financial institutions, and professional property appraisers do use sophisticated versions of them as a starting point before doing an on-site appraisal.

After you have checked your home’s value online, consider meeting with a real estate agent to see what they would list your house for. If the numbers are aligned, that’s a good thing! But if the numbers are wildly off, a professional home appraiser can help.

If you receive a home appraisal that is a lot different than the amount an online value home estimator provided you, do not be alarmed. It’s common for these numbers to be different, and when they are, we recommend trusting the person who looked at your property in person. Artificial Intelligence cannot yet beat human input when it comes to home appraisals!

Contact D. Fritz Appraisals today to book your next appraisal in Victoria, BC. We specialize in real estate appraisals for all situations, such as mortgage refinancing, new construction, division of assets, and estates.

Home Inspection vs Home Appraisal

Home Inspections vs Home Appraisals

What’s the Difference Between a Home Inspection and a Home Appraisal?

If you’re in the market for a new home, the terms “home appraisal” and “home inspection” are more than likely to come up at some point as you zero in on a property you want to buy. Upon acceptance of your offer, the next steps are usually:

  • home inspection – a voluntary third-party service ordered by the buyer, and
  • home appraisal – an often mandatory step the buyer’s lender insists on.difference between home appraisal and home inspection

A home appraisal and a home inspection are two important steps in many real estate transactions, and for new buyers, there can sometimes be confusion over the two terms. An appraiser and a home inspector are two different service providers, who both happen to be looking at the house you are thinking of buying, but for different reasons. Understanding the differences between an appraisal and an inspection will help you understand when you might need one or the other – or both – before you buy your first home.

Let’s explore the similarities and differences between a home inspection and a home appraisal.

What Is a Home Appraisal?

Sometimes referred to as a property appraisal or a real estate appraisal, a home or house appraisal is a third-party report written by a professional appraiser that is meant to inform you and your mortgage lender on the monetary value of the property you are looking at buying.

Appraisals help make sure all parties in a real estate transaction get a current, accurate, and fair value for the property. In many cases, a mortgage lender assigns a home appraiser to go and view the property and generate a report. The appraiser confirms with the bank that the amount of money being loaned out is fitting, so the bank doesn’t lose in the case of foreclosure.

Like us here at D. Fritz Appraisals in Victoria BC, home appraisers check the overall condition of the home and compare it against the prices of recently sold and currently listed homes in the neighborhood to determine a value for the property. As professional appraisers, we also look at things like square footage, number of bedrooms and bathrooms, any obvious property damage, quality of the views, and the working order of major systems and structures as well.

Appraisers also factor in the neighbourhood, such as nearby school zones, local crime rates, the lot size, proximity to amenities, and any up and coming construction that might increase the value of the existing property.

Read More: 8 Ways to Increase the Value of Your Home

Once our appraisal is complete, a report is generated. Real estate appraisal documents are legal, confidential documents that are only released to the original requestor of the appraisal report as well as other parties with the original requestor’s permission.

What Is a Home Inspection?

During a home inspection, a home inspector inspects the property to report on any issues that could spell trouble for the buyer down the road, such as a cracked foundation, leaking roof, mold and water damage, evidence of a pest infestation, building code violations, and poorly installed plumbing and electrical equipment, for example.

A house inspector does not report on how much they think a home is worth on the market in its current condition. While a home appraiser also looks at the home’s physical condition, the inspector delves a little deeper than an appraiser, peaking behind the walls and in the crawl space and attic, for instance, to report on any costly repairs that might be needed in the future.

What do home appraisals and inspections have in common?

Appraisals and inspections share many similarities. For example:

  • They are both provided by a third-party, non-biased, professional agency.
  • They both involve a professional visiting and analyzing the condition of the property.
  • They both happen prior to the sale of a home and are often both added as subjects on a contract.
  • They both result in detailed reports highlighting the property’s condition, functionality, and integrity.
  • They both benefit the buyer primarily during the closing of their desired property.
  • They both require the seller to give them permission to enter the premises.

Both services also give a buyer negotiating power. If a contract of purchase includes a subject of sale based on the results of a home inspection, for example, a buyer can back out of the deal or negotiate a better price. Likewise, in the case of an appraiser appraising the property for less than expected, the lender may not loan the necessary funding, and the buyer can go back to the seller with this information. If there was a subject to financing, the seller may choose to work with the buyer by lowering the price.

How are home appraisals and home inspections different?

Despite having many similarities, appraisals and inspections have some key differences:

  • An appraiser examines the home as well as the values of other properties that have recently been sold in the area. In contrast, an inspector only looks at the property in question.
  • A buyer typically orders a home inspection at their discretion, whereas a home appraisal is usually mandated by their lender (mortgage provider).
  • An appraiser determines the value of the real estate, whereas an inspector reports on the overall condition of the home.
  • A home inspector stays on site for longer than an appraiser, searching every nook and cranny. In contrast, an appraiser is doing a simple walkthrough and combining their findings with information they gather off-site.

Do You Need both an Appraisal and a Home Inspection?

As a buyer, booking a home inspection is entirely up to you. It’s not unlike having a used car checked out by an auto mechanic before you buy it. A home inspection can save you thousands of dollars in the long run.  A home appraisal, on the other hand, is almost always required if you are looking to secure financing from a mortgage lender.

However, a property appraisal isn’t just for your lender’s peace of mind. It can also help you answer the question: Is the property really worth as much as the seller is saying it’s worth? Scheduling a home inspection on top of the home appraisal your lending institution will likely require you to get is often the most recommended course of action, especially if the property you are looking at is older, is no longer under a developer’s warranty, or is in a neighbourhood you are unfamiliar with.

Remember:

  • a home inspector cannot tell you what the home is worth. A home inspection report cannot be used to calculate a home’s value.
  • a home appraiser cannot speak to the level of repairs the home will need now or in the future. In other words, a highly appraised property value does not mean the property is in good shape underneath the finishings.

By ordering both processes, you get a complete picture of the property, without having to go solely on the word of the seller and their realtor. If you’re buying your first new home, we at D. Fritz Appraisals recommend both an inspection and an appraisal be done on the property for your total peace of mind before you buy.

To learn more about the appraisal process and what appraisers look for when we visit your property, contact D. Fritz Appraisals – your property appraisal experts in Victoria, BC, servicing Vancouver Island and the Gulf Islands.