Real Estate Appraisals in Ontario: Benefits & Tips for Buyers & Sellers

What is a Home Appraisal?

A home appraisal is an unbiased professional opinion of the fair market value of a property from a certified real estate appraiser.

There are a few different appraisal methods, from bank appraisals to real estate appraisals (Comparative Market Analysis or CMA) to municipal tax assessments, each plays a distinct role in determining the worth of your property.

What are the Reasons Why You Need a Home Appraisal?

Mortgage lenders typically require an appraisal when you are refinancing your home or seeking a mortgage loan for a new home. The appraised value ensures the subject property is worth the mortgage before the lender commits to the deal. In this situation, the lender arranges the appraisal, and the buyer pays for it in closing costs.

What is a Comparative Market Analysis (CMA)

Imagine you're thinking about selling your home or maybe refinancing your mortgage, and you want to figure out how much your property is really worth. 

That's where a Comparative Market Analysis, or CMA for short, comes into play. Think of it as a detailed snapshot of the market, created especially for your property by your local real estate agent.

Here's How a CMA Works:

Your local realtor compares your home to others in the neighborhood that have sold recently. The realtor looks at everything from the sale prices of these homes to their conditions, sizes, and even the little extras they offer, like a swimming pool or a brand-new kitchen. It's not just about finding the price of your property; it's about understanding where your home stands in the current market landscape. 

More on what a realtor looks for in a CMA, further down in this post.

Why is a CMA Important for You?

A CMA gives you the insider information you need to make smart decisions. Whether you're setting a price to attract buyers quickly or figuring out if it's the right time to refinance, knowing the value of your home in the eyes of the market today is invaluable. It's like having a roadmap for your next big financial move. 

More on the benefits of a CMA further down in this post.

What are the Reasons Why You Need a CMA?

A Comparative Market Analysis (CMA) is a smart move for you as a homeowner here in Ontario because it arms you with up-to-date, realistic information about what your home is actually worth in today's market. 

How? Because a CMA looks closely at recent sales and what's happening right now in the local real estate market.

This isn't just about throwing a price tag on your home. It's about giving you the power to make informed decisions. Whether you're thinking about selling, refinancing, or tapping into your home equity, knowing your property's value is key.

When a CMA is done by a licensed local real estate pro, you get insights that are custom-fit to your home. At Flowers Team Real Estate we take into account all the things that make your place special – from the big backyard to the renovated kitchen – so you have a clear, personalized picture of your home's standing in the market. It's about getting guidance that's as unique as your home itself.

What is a Municipal Tax Assessment?

Think of a municipal tax assessment as the way your local government figures out how much you should pay in property taxes every year. They look at things like how big your place is, where it's located, and how well it's built.

Local municipalities use this method, to come up with what they think your home's value is for tax purposes. They'll consider the details of your property, like its size and features, and then apply the local tax rates to decide your bill.

Why Does a Municipal Tax Assessment Matter to You? 

Well, your property tax is a significant part of your yearly expenses as a homeowner. But the tax assessment might not always match up with what your home could sell for on the market right now. It's important because it helps you as a homeowner understand why there might be a difference between what the government says your home is worth and its actual selling price. It also explains why keeping an eye on your tax assessment is a smart move, especially if you're thinking about selling or refinancing.

Pre-listing Appraisal Benefits for Sellers

If you are looking to sell your home, you can arrange a Comparative Market Analysis (CMA) appraisal for your property and use it to your advantage before listing.

Key Differences Between CMA vs. Bank Appraisal vs. Assessment

Understanding the differences between CMA (current market assessment), bank appraisal, and an assessment can help you gain crucial property valuation insights:

• CMA: As mentioned earlier a CMA done by your local real estate agent helps establish a price range for buying or selling a home. Real estate professionals leverage recent comparable property sales and unique features to determine a home's market value. Unfortunately, lenders don’t accept CMAs in lieu of a bank appraisal.
• A bank appraisal is performed by a non-biased, third-party licensed appraiser appointed by the lender or hired by the owner to assess the value of a property. Appraisals are typically done before selling your home, taking out a mortgage on a house you intend to buy, or drawing equity from a property you own. Lenders use the appraisal to set the maximum mortgage.
• An assessment is typically for tax purposes. The municipality assesses properties to ensure owners pay fair taxes relative to area, lot size, and age of buildings. This isn’t the same as the current market value. 

While CMAs focus on the market, bank appraisals aim for mortgage risk mitigation, and assessments impact property taxes.

Benefits of a CMA

Benefit #1: Price Your Home Easier

Although your real estate agent will likely do their own comparative market analysis, the appraisal can help determine your home's listing price.

Benefit #2: Home Improvement Ideas

An appraisal can pinpoint areas of the home that, if renovated, can add value before listing. Your real estate agent can advise on whether the renovation would be cost-effective. DIY projects typically get the go-ahead, but an agent's advice can save you from hiring unnecessary contractors.

Benefit #3: Accurate Data

A residential CMA  provides accurate property information you can include in your listing, such as square footage, number of bathrooms and bedrooms, appliances, HVAC details, neighbourhood description, market conditions, and a complete description of renovations and upgrades.

Benefit #4: Credibility

Setting the right price is crucial in selling your home fast. A property appraisal in Ontario supports your real estate agent’s listing price and gives it credibility while instilling confidence in your decisions.

What Does a Real Estate Agent Who Does a CMA Look For?

There are two steps to completing a CMA. These include general steps and those tailored to your property. A real estate agent completing a CMA must visit your property to properly assess it. Other factors when determining a home's value may include:

• Age and condition: The appraiser looks at various things, such as the age and condition of the HVAC system, electrical supply, plumbing, roof, and any other damage or wear and tear. The appearance from the street (curb appeal) can also affect its value. An unattractive exterior, poorly maintained yard, or lack of landscaping can have a negative impact.
• Property size and features: An appraiser measures the square footage of the home and notes any unique features, such as a garage, swimming pool, sauna, or gym.
• Renovations and upgrades: The appraisal report notes all upgrades and renovations, including bathrooms, kitchens, finished basement, or HVAC equipment. The appraiser considers their positive impact on the property's end value. If the appraiser finds any renovations or additions without the proper permits or inspections, this will negatively impact the appraisal results.
• Location: The property's location directly affects the comparative market analysis, such as the proximity to public transportation, schools, hospitals, recreation, parks, and more. Each buyer has their preferences on what they consider a convenient location. Conversely, properties in less desirable neighbourhoods with high crime rates, near busy roads or noisy highways, may appraise lower.
• Zoning and regulation compliance: The appraiser checks for compliance with building codes and zoning regulations and notes any property value issues.
• Market conditions: The current condition of the real estate market can impact property values, including the state of the economy, supply and demand, and other factors.
• Recent sales: The appraiser will do a comparative market analysis (CMA) of homes of similar age, size, and features sold in the area.

It’s important to understand the difference between a CMA and bank appraisal. A CMA does not cost anything. An appraisal may be required by a lawyer In situations where a divorce occurs or there is a division of property. There are also specific scenarios where an appraisal may be paid for.

Understanding the Importance of Home Appraisals When Selling Your Property

Understanding home appraisals in Ontario can significantly enhance the success and profitability of your home-buying or selling experience.

The process, especially a pre-listing appraisal, offers many benefits for sellers, including easier pricing decisions, valuable insights for home improvements, and creating a credible listing price. Knowing what appraisers look for, such as property features, renovations, and location, enables sellers to prepare their properties effectively.

Your dream home or successful property sale is just a partnership away with Flowers Team Real Estate.