What is a Residential Real Estate Appraisal?
A residential real estate appraisal is an assessment of the market value of the property. Market value is the most probable price that a typical purchaser will pay in a competitive and open market. Your financial institution may require this appraisal to establish a minimum value if you are using the home as collateral for a mortgage. You might also require an appraisal for legal purposes like divorce or estate planning, or for tax purposes like establishing capital gains. You may also want an appraisal for personal interest or to decide if proposed renovations are worth the investment.
A real estate agent may have offered you a comparative market analysis (also called a CMA). This is a report based on information on the multiple listing service (MLS) in the area. This is used to help an owner and their realtor determine the best asking price and to have an idea of likely offers. CMAs will not be accepted by lenders for mortgage value. Only an appraisal by a designated appraiser will be considered by a financial institution.
What goes Into a Residential Appraisal Report?
A residential appraisal is based on the current condition of the property and analysis of current sales in the area and cost information.
It will include details about the property being appraised including location, site size, age of dwelling, upgrades to the dwelling, any built-in features, etc. It will have information about the current real estate market in the area, a calculation of the average time a property will be on the market before selling as well as conformity to the current zoning and municipal by-laws.
How is the value is determined?
Generally, two methods are used: