An appraisal is an unbiased, formally presented opinion of a property’s value. An appraisal can be presented in a variety of ways – from a short form style report (few pages) to a full narrative report (think 50+ pages), and anything in between.
This is a question we get a lot and the answer is – it really depends on your property, where it is located, what kind of appraisal report you need, and what that report will be used for. Please contact us directly and we can provide you with a quote and estimated timeline.
If you are located anywhere in NW Alberta or NE Saskatchewan, then we likely do. Please see our coverage area map and/or contact us to inquire further.
There are many reasons to get a professional appraisal report completed on your property, and they pretty much all have to do with money. If you are buying/selling/refinancing/transferring within family/getting a divorce/settling an estate/disagreeing with your business partner/developing land…..the best way to illustrate what use an appraisal could be is through examples:
- You are thinking about selling your property – a professional accurate appraisal shared with potential buyers is good incentive that your property is worth what you say it is.
- You are thinking about buying – we recommend that you put “subject to satisfactory appraisal” as a condition on your offer, to make sure it’s worth it – or to renegotiate after.
- You are in the middle of a separation – it’s stressful. You’ve been told that your property is worth X amount and it sounds reasonable. But, if spending $500+/- on a professional appraisal ends up saving you thousands, then it’s worth it, right?
- You’re settling an estate with a lot of farmland and only some people in your family are farmers – so they know best, makes sense. But if you’re disagreeing, isn’t it easily settled with a professional appraisal report that may come out much different than you originally thought?
- You are a commercial developer and you’ve purchased land – what is the best way to maximize your investment? What “use” produces the best return, when and how?
- You are thinking about selling your property – a professional accurate appraisal shared with potential buyers is good incentive that your property is worth what you say it is.
- You are thinking about buying – we recommend that you put “subject to satisfactory appraisal” as a condition on your offer, to make sure it’s worth it – or to renegotiate after.
- You are in the middle of a separation – it’s stressful. You’ve been told that your property is worth X amount and it sounds reasonable. But, if spending $500+/- on a professional appraisal ends up saving you thousands, then it’s worth it, right?
- You’re settling an estate with a lot of farmland and only some people in your family are farmers – so they know best, makes sense. But if you’re disagreeing, isn’t it easily settled with a professional appraisal report that may come out much different than you originally thought?
- You are a commercial developer and you’ve purchased land – what is the best way to maximize your investment? What “use” produces the best return, when and how?
There are many people involved in the real estate industry that may have a good indication of what your property is worth. The question you should always ask yourself though is, what do they have to gain in this situation?
Professional Appraisers have no ulterior motives. They don’t get commission based on your property value, they don’t get a bigger annual bonus, and they are not pressured from outsiders to have your property value be higher or lower than what it truly is. It makes no difference to the appraiser what your property sells at, how much you refinance at, or what your property taxes are.
Their only motive is to provide you with unbiased, accurate and defensible appraisal reports.
Professional Appraisers have no ulterior motives. They don’t get commission based on your property value, they don’t get a bigger annual bonus, and they are not pressured from outsiders to have your property value be higher or lower than what it truly is. It makes no difference to the appraiser what your property sells at, how much you refinance at, or what your property taxes are.
Their only motive is to provide you with unbiased, accurate and defensible appraisal reports.
With conventional appraising, an integral part of the appraisal process is inspecting the property. For a residential home or condo, you should expect the inspection to take anywhere from 20 minutes or longer. The appraiser will take photos of the exterior and interior, take measurements of the home, and note the various aspects and finishes of the property – number of bedrooms and bathrooms, layout, flooring, kitchen finishes, etc. It is helpful to provide the appraiser any information you can about the property – how long you have lived there, any renovations that have been completed, any problems or repairs that are needed – and it’s also helpful to provide a copy of your current tax assessment, blueprints, or a real property report if you have one.
Inspections of Commercial or Agricultural properties are similar but can take more time – and again, it is helpful to provide the appraiser any information you can about the property.
Inspections of Commercial or Agricultural properties are similar but can take more time – and again, it is helpful to provide the appraiser any information you can about the property.
Every appraisal is based on information about the property and the market in which it is located. Aspects such as a property’s location, age, size and condition are considered, along with recent sales in the area, current economic conditions, and the overall condition of the local market.
There are three common approaches to value which are typically in one form or another incorporated into every appraisal report:
The Cost Approach – which estimates value by estimating the current cost to construct a replica of the property, including entrepreneurial profit, deducting depreciation from the total cost, and adding the estimated land value. This approach is most applicable for newer properties where the physical depreciation can be accurately measured – and the property is not subject to functional or economic depreciation.
The Income Approach – this approach converts a property’s anticipated future benefits into property value. A common way to do this is by capitalizing one year’s stabilized income with a market derived risk rate, or by estimating the annual cash flows for a certain holding period and discounting the reversion by a specific yield rate. Essentially, this approach estimates a property’s income ability relative to the current and anticipated risk of that income in the market.
The Direct Comparison Approach – this approach is based on the theory that an informed purchaser or market participant would pay no more for a property than the cost of acquiring another existing and highly similar property. Value is determined through this approach by comparing the property being appraised to other similar properties which have recently sold (or leased), and by making appropriate adjustments to account for any differences between then. This approach is used for improved properties (residential, commercial, agricultural), and vacant land.
There are three common approaches to value which are typically in one form or another incorporated into every appraisal report:
The Cost Approach – which estimates value by estimating the current cost to construct a replica of the property, including entrepreneurial profit, deducting depreciation from the total cost, and adding the estimated land value. This approach is most applicable for newer properties where the physical depreciation can be accurately measured – and the property is not subject to functional or economic depreciation.
The Income Approach – this approach converts a property’s anticipated future benefits into property value. A common way to do this is by capitalizing one year’s stabilized income with a market derived risk rate, or by estimating the annual cash flows for a certain holding period and discounting the reversion by a specific yield rate. Essentially, this approach estimates a property’s income ability relative to the current and anticipated risk of that income in the market.
The Direct Comparison Approach – this approach is based on the theory that an informed purchaser or market participant would pay no more for a property than the cost of acquiring another existing and highly similar property. Value is determined through this approach by comparing the property being appraised to other similar properties which have recently sold (or leased), and by making appropriate adjustments to account for any differences between then. This approach is used for improved properties (residential, commercial, agricultural), and vacant land.
There are many technical things that each appraisal report must contain to meet the standards set by the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP), but in layman’s terms, appraisal reports typically have the following:
- Identification of the property, the client and intended users of the report, and the intended use of the report
- The type of value being determined (ie Market Value), and the effective date of value
- Information relative to the market in which the property is located
- Relevant property characteristics such as location, physical, legal and economic attributes
- An analysis of the market value of the property – using any or all of the three generally accepted approaches (Cost Approach, Income Approach, Direct Comparison Approach)
- A reconciliation and exposure time analysis
- A conclusion with an estimated value, signed by the appraiser
- An addendum of important supporting documents (maps, photos, mls listings, land titles, etc)
- Identification of the property, the client and intended users of the report, and the intended use of the report
- The type of value being determined (ie Market Value), and the effective date of value
- Information relative to the market in which the property is located
- Relevant property characteristics such as location, physical, legal and economic attributes
- An analysis of the market value of the property – using any or all of the three generally accepted approaches (Cost Approach, Income Approach, Direct Comparison Approach)
- A reconciliation and exposure time analysis
- A conclusion with an estimated value, signed by the appraiser
- An addendum of important supporting documents (maps, photos, mls listings, land titles, etc)
As defined by “The Appraisal of Real Estate, Third Canadian Edition”, Market Value is “The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress”.
It is important to understand that while “market value” typically refers to many buyers and sellers in a competitive market, this is not always the case with certain properties, or it might not be the type of value that would best suit your needs. There are many other types of values that appraisers can determine – such as “In Use Value”, “Insurable Value”, “Fair Value”, “Forced Sale Value”, etc.
As an example, if you are selling your neighbor some farmland that only they can really use due to topography limitations, or only they would really want due to owning surrounding properties – than determining a “fair value” to them might be more useful to you than “market value”.
It is important to understand that while “market value” typically refers to many buyers and sellers in a competitive market, this is not always the case with certain properties, or it might not be the type of value that would best suit your needs. There are many other types of values that appraisers can determine – such as “In Use Value”, “Insurable Value”, “Fair Value”, “Forced Sale Value”, etc.
As an example, if you are selling your neighbor some farmland that only they can really use due to topography limitations, or only they would really want due to owning surrounding properties – than determining a “fair value” to them might be more useful to you than “market value”.
Some major lending institutions have started to use AMC’s to manage their appraisal needs. The AMC is essentially a coordinator acting between the bank and an appraisal firm – who orders the appraisal, negotiates the cost, tracks its progress, and then delivers the appraisal report to the bank/lender. Atlas Appraisal Services completes reports for all banks/lenders and the AMC of their choice.
It is important to note that different AMCs have different requirements, set timelines and fees, and certain forms they require the appraiser to use, etc. We recommend checking with your lender to make sure the AMC of their choice is going to suit you.
Please don’t hesitate to contact us if you’d like to learn more about Appraisal Management Companies and how they work. It is important to understand that while lenders may like to use AMCs, this extra step does come at a cost, and in the end, you, the consumer, are likely footing the bill.
It is important to note that different AMCs have different requirements, set timelines and fees, and certain forms they require the appraiser to use, etc. We recommend checking with your lender to make sure the AMC of their choice is going to suit you.
Please don’t hesitate to contact us if you’d like to learn more about Appraisal Management Companies and how they work. It is important to understand that while lenders may like to use AMCs, this extra step does come at a cost, and in the end, you, the consumer, are likely footing the bill.
While it may seem obvious that if the appraisal report is on your property you should get a copy, that is not always the case. Canadian Appraisal Standards require strict clarification on who the “client” of the appraisal is and then have strict rules on client confidentiality. While Atlas Appraisal Services is happy to provide report copies to those whom we are instructed to do so, our hands our quite often tied when dealing with banks, brokers and Appraisal Management Companies.
For an example – you are doing some refinancing at your bank and need an appraisal. You have to pay for it, but your bank orders it. In this case, the bank is technically the client and you are therefore only entitled to a copy of it if the bank allows it. And even then, you are not able to use that report for a different purpose – say, if you decide to switch banks – unless the “client” releases that ability to you.
We recommend contacting us directly to order your appraisal – as long as your bank is flexible in that way and you will be able to use the report with them. If that’s not an option, we recommend at least checking with your bank ahead of time to clarify what their rules are.
For an example – you are doing some refinancing at your bank and need an appraisal. You have to pay for it, but your bank orders it. In this case, the bank is technically the client and you are therefore only entitled to a copy of it if the bank allows it. And even then, you are not able to use that report for a different purpose – say, if you decide to switch banks – unless the “client” releases that ability to you.
We recommend contacting us directly to order your appraisal – as long as your bank is flexible in that way and you will be able to use the report with them. If that’s not an option, we recommend at least checking with your bank ahead of time to clarify what their rules are.
Appraisers at Atlas Appraisal Services are certified with the premier appraisal organization in Canada, The Appraisal Institute of Canada (AIC). In order to receive their designations, they have taken many university level courses and have passed vigorous written, oral and experience-based exams. They have years of experience valuing property and have on-going educational and experience-based training in order to maintain their designations.
The following are the three active types of appraisers with the AIC:
Accredited Appraiser Canadian Institute (AACI, P.App)
- Requires a Business Degree or the equivalent
- Minimum of Two Years of Applied Experience under Candidacy program
- Work Product Review, Written and Oral Exams
- Qualified to appraise All Kind of Property
- Qualified for Appraising, Consulting and Reviewing
Canadian Residential Appraiser (CRA)
- Requires Two Years + post-secondary
- Minimum of One Year of Applied Experience under Candidacy program
- Work Product Review, Written and Oral Exams
- Qualified to appraiser Residential Property Only (no commercial or agricultural)
Candidate Member
- Requires Two Years + post-secondary
- Must be enrolled in Applied Experience Program working towards designation
- Designated members must co-sign all reports
Please check out the AIC website for more information.
The following are the three active types of appraisers with the AIC:
Accredited Appraiser Canadian Institute (AACI, P.App)
- Requires a Business Degree or the equivalent
- Minimum of Two Years of Applied Experience under Candidacy program
- Work Product Review, Written and Oral Exams
- Qualified to appraise All Kind of Property
- Qualified for Appraising, Consulting and Reviewing
Canadian Residential Appraiser (CRA)
- Requires Two Years + post-secondary
- Minimum of One Year of Applied Experience under Candidacy program
- Work Product Review, Written and Oral Exams
- Qualified to appraiser Residential Property Only (no commercial or agricultural)
Candidate Member
- Requires Two Years + post-secondary
- Must be enrolled in Applied Experience Program working towards designation
- Designated members must co-sign all reports
Please check out the AIC website for more information.