There are a bunch of reasons why they’re happening.
If you’ve been involved in the sale of a residential property in Ontario in the past 3 years – whether as a vendor, purchaser, real estate agent, mortgage broker or lawyer – you know that residential appraisals seem to take longer than they used to. Unfortunately, the current extended timelines for residential appraisals are a result of several different factors, not all of which are easily solved. However, the more you know about the process, the better you’ll be able to minimize delays where possible.
1. (a) The better the appraiser, the busier they are.
Here’s the thing: Good appraisers are busy right now. An appraiser who says they need a few days’ lead time for a valuation is telling you that they’re in-demand, likely pretty reliable, and has repeat customers. An appraiser who tells you that they can “head out there this afternoon” may have had a last-minute cancellation – or they may not be anyone’s first choice.
1 (b) Good appraisers respect their clients.
We know it’s frustrating, when you call the appraiser, to hear that they have X clients in line before you. But an appraiser who delivers on existing commitments is also going to be committed to delivering on yours – and that’s a good thing.
2. Appraisals shouldn’t be a last-minute afterthought.
We know the residential market in southern Ontario can be frantic right now, with bidding wars and huge down payments and midnight offer signings. However, real estate appraisals are supposed to be very non-frantic: They are supposed to be sober, considered, defensible valuations that can stand up in court if required. Appraisers are putting their license on the line every time they sign off on a valuation.
With that in mind, it’s important to make the appraisal part of the planning process right from the get-go, the same way purchasers might meet with a financial institution or a real estate lawyer prior to making an offer on a specific property. Getting an appraiser lined up ahead of time can help ensure fewer unanticipated delays when the offer is ultimately signed.
3. Seasonality is going to affect turnaround times.
Residential real estate activity jumps sharply in May, June, July and August – which means that residential appraisal activity also gets busy at these times. The appraisal that takes 2-3 days in December may take 1-2 weeks in May. Sure, it’s a pain, but it’s an industry-wide seasonality that you’ll also see in the other professionals (lawyers, financial institutions, home inspectors, etc.) involved in a real estate transactions.
4. Pre-assembled documentation reduces delays.
Recently, we’ve seen delays caused as we’ve waited for surveys, asbestos removal certification (yes, it still comes up!), reports of septic systems and other property-related documentation. While some documentation (such as a survey of an average property in a newer subdivision, where property lines are pretty well known) won’t affect valuation, others are crucial. Having a certification of asbestos removal, for example, can have a huge impact on the value of a property.
5. Managing expectations is half the battle.
Here’s the thing: In the current market, it’s unusual for an appraisal to totally derail a house purchase or sale. (Once in a while, a low appraisal gets in the way of a refinancing, but this is almost always because the homeowners were a little too optimistic about their home’s appreciation.)
It’s helpful to keep this in mind as you go into the appraisal process: Yes, appraisals may take a few days longer than everyone would have hoped, but those few extra days don’t mean a deal has to fall apart. When all the professionals involved in a residential purchase and sale are realistic about timelines, it reduces everyone’s stress levels.
It will get better!
Everyone knows that the past couple of years have been unusual, and that’s affected all areas of real estate. But we’re already seeing tentative signs that the market is becoming a little less frantic – and the appraisal process will, eventually, also improve.