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Canadian Real Estate Appraisal
The determination of the value of Canadian real estate is essential to the
economic well being of society. Real estate appraisal is an estimate of
the value of property using various methods. An Canada appraisal is
determined with one of three approaches, a cost approach, a comparison
approach, or an income approach.
Appraisals are very detailed reports, but here are a few things they
include:
1.
Details about the subject property, along with side-by-side comparisons of
three similar properties.
2. A description and evaluation of the overall real estate market in the
area.
3. Statements about issues the appraiser feels are harmful to value or
resale, such as poor access to the property.
4. Notations about seriously flawed characteristics, such as a crumbling
foundation.
5. An estimate of the average sales time for the property.
6. What type of area the home is in (development, stand alone acreage,
etc.).
Cost Approach- The cost approach is most useful for new properties, where
the costs to build are known. The appraiser estimates how much it would
cost to replace the structure if it were destroyed.
Your
personal approval is accomplished early in the loan process, but final
loan commitment usually hinges on a satisfactory appraisal. The bank wants
to be sure its investment is covered in case you default on the loan.
Sales Comparison Approach- The appraiser estimates a subject market value
of property by comparing it to similar properties that have sold in the
area. The properties used are called comparables.
No two properties are exactly alike, so the appraiser must compare the
comps to the subject property, making paperwork adjustments to the comps
in order to make their features more in-line with the property of the
subject. The result is a figure that shows what each comp would have sold
for if it had the same components as the subject.
An appraisal helps to establish a property's market value-the likely sales
price it would
Author:
Lance Williams is an accomplished
writer, writing for http://www.mortgagefit.com.
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