Kevin Slemko AACI appraiser hamilton

Residential appraisals are more straightforward than you think

You’ve sold your house, but your offer is conditional upon an appraisal by the bank. What does this mean?

The buyers of your home have applied for a mortgage from a bank, with the house used as collateral. The bank gets an appraisal to ensure that there’s enough value in the home to cover the mortgage in the event the buyers default. (Depending on the financial institution, the client and the economic climate, the bank may have rules around the percentage of the value they will loan the client. Typically this is 80% of the home value or less.)

To determine value, the financial institution will engage an appraiser. While some banks have in-house appraisers, in southern Ontario it’s more common for a bank to engage an independent appraiser with specific experience in the geographical area.

While, in some cases, the bank will accept an appraisal from a local real estate agent, they generally prefer to have appraisals done by appraisers who have been certified by the AIC (Appraisal Institute of Canada). AIC-certified appraisers are professionals who have to meet high standards of knowledge, professionalism, ethics and experience, so their valuations are generally considered to be more objective and accurate.

There are two AIC certifications:

CRA: Certified Residential Appraiser. CRA-certified appraisers can appraise residential properties and land or lots designated for residential development.

AACI: Accredited Appraiser Canadian Institute. Appraisers with the AACI designation can appraise any type of property, including residential homes, commercial, industrial and agricultural properties, with machinery and equipment.

Regardless of the appraiser the bank chooses to value your home, the basic process is the same: The appraiser will visit your property, take a good look (and photographs) inside and out, and then compare your home with others which have recently sold in the neighbourhood in order to determine the market value for your property.

It doesn’t seem complicated – but appraising a property involves years of experience, training and knowledge, about house construction, land values, market conditions and the overall economy.

Want to know more about residential appraisals? Get in touch.

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