What steps are taken when appraising a home?

• To begin, a review of the overall local market activity is completed. This includes year over year, month to month analyses, as well as references to the Home Price Index (HPI)

• The appraiser then begins a review of the subject’s neighbourhood market data (references are made from MLS data, previous/similar appraisal files). My experience appraising properties in Saint John and surrounding areas has allowed me to determine the boundaries of where comparable and relevant areas exist. In most cases 10-20 properties from within the comparable areas are considered in the initial research.

• The Direct Comparison Approach to Value is implemented with focus given to the most similar and most recent transactions prior to the effective date.

What is “Fair Market Value”?

Fair Market Value is the most probable price a property should sell for in a competitive and open market, under all conditions requisite to a fair sale; the buyer and seller, each acting knowledgeably and assuming the price is not affected by undue, anomalous stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

• (1) Buyer and Seller are typically motivated [Arms Length];

• (2) Both parties are well informed or well advised;

• (3) A reasonable time is allowed for exposure to the open market;

• (4) Payment is made in terms of cash in Canadian Dollars or in terms of financial arrangements comparable thereto; and

• (5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
  

Can you provide Fair Market Value for a past date?

Yes, this would entail a retrospective value. Typically a property can be appraised as far back as ten years prior to the effective date. Often there are historical photographs available of the property.

Can we ask you for a high or low value?

No. In fact, I will be unable to take the assignment if the topic of value, value direction, or other opinions of value comes up, even generally, prior to completion of the appraisal.

• All work is done on a strictly neutral/unbiased basis. I am hired in situations where the client wishes to know the fair market value as of a specific date.

• The ethical foundation of my work is governed by the CANADIAN UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE [CUSPAP 2022].

The purpose of this appraisal is for refinancing, will this affect my property tax assessment for the following year?

In most cases your property is being appraised on behalf of the lender or financial institution. Therefore, your lender is the only party [intended user] who reserves all rights to the report. This report is completely separate from local municipality property assessment. However, there are some cases where documents are filed through Service New Brunswick when the financing process is undertaken. In some cases, the appraised value is made available. I always advise home owners to speak with there financial representatives for more information about this topic as this depends on how the refinance is documented by the lender or lawyer.

Your policy calls for payment prior to inspection. Why is that?

This is not an uncommon practice in the appraisal industry. The policy relieves me from any perceived relationship between the appraisal ‘result’ and payment for services. As I take a numerous number of assignments, it also allows me to effectively schedule appointments and production times. While the vast majority can be accounted for a timely payment, there has been, in the past, the occasional issue with people who are ultimately unable to pay for the service or who are withholding payment in hopes for a different value. Overall, this assures me of compensation, regardless of the appraisal outcome.

Distinguish between your Appraisal and a Free Evaluation?

We all receive real estate promotions in our doors offering "free, no obligation appraisals". Agents are simply doing their jobs and hoping for your business now or in the future.

• In this situation, the agent typically supplies an informal opinion of value and a marketing plan for your consideration.  It is generally (but not always) thin on analysis. However, as professionals, agents can provide reliable opinions of value even though they are not recognized as appraisers. Typically, legal situations require the work to be done by an accredited appraiser.

• A Fair Market Value Appraisal on the other hand, is a formal demonstration of determining the market value of a property based on thorough research, an understanding of market conditions and carefully weighed analysis as described in the first question. 

Is there anything I have to do before the inspection?

There isn't a lot required of the client/home owner before an appraisal inspection. Generally speaking, the home in its normal condition is sufficient for appraisal purposes.

• It is very helpful if there is easy access to the heating/cooling systems, electrical panel, garage, and all of the rooms of the property.

• If you can prepare/provide a list of recent renovations implemented to the property, generally within the last five years this is also a bonus.

• If there is any ongoing work, it would be useful to discuss the estimate to bring the project to completion.

• Other matters like realty taxes, assessments, area sales, survey plans, parcel dimensions are already on file with the appraiser.

Do you discuss the appraisal results, share photos with anyone else?

No. All work is confidential.

• The appraisal is for the client's information only and can be discussed with a third party only with the client's expressed consent. 

Does the client have to be at the property?

The client normally arranges to meet me at the property.

• Sometimes a relative, neighbour, concierge or tenant provides access and payment on the client's behalf. Lockboxes are also a possibility. If more questions are needed during the inspection or after the client may be contacted.

Distinguish between a Home Inspection and an Appraisal

The Market Value Appraisal is intended to capture the value of a property as of an effective date, based on market research of comparable sales, relevant economic conditions, and relative values of various elements of the property. 

A Home Inspection, on the other hand, is intended to analyze the 'functionality' of the property considering structural, mechanical, and systemic components.

• The Home Inspector may refer to costs of repair, but matters of real estate property values are not a part of their expertise.

• It would be highly unusual for a Home Inspector to comment on the value of the property just as it would be unusual for an appraiser to comment on the more latent elements of the subject property.

How long does it take to prepare an appraisal?

The majority of my assignments are completed within 24 hours. However in the case the property is unique/complex more time for research may be required. Expedited timelines will be considered whenever possible.

Do you factor in "the condition" of the property?

Yes, absolutely. After adjustments for location, time, lot size, interior square footage, room count, finishes, and parking (etc.) the property's specific condition is considered.

• Adjustments are then made for any significant items structure, mechanics, renovations, deficiencies.

• These items are fairly apparent at the time of inspection.

• Housekeeping itself, is not a big factor unless the property is unkempt to an extreme

Can we hire you to critique the work of another appraiser?

No.  My company and its governing bodies (NBAREA/AIC) would consider this to be unethical. They do not encourage me to comment on the work of other appraisers.

• It is more constructive to request a fresh appraisal without any reference to other work. However, remaining unbiased, I do not wish to know anyone else’s opinion of value.