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 What is an appraisal?

Simply put: an appraisal is a professional’s opinion on the true market value of your home.  Banks use appraisals, and so do home owners during the process of buying, selling or refinancing a home.

How do appraisers calculate my home’s worth?

Cost Approach: Based on the current price of materials, the cost approach estimates the cost to reproduce a new building identical to your property. The appraiser then subtracts any accumulated depreciation due to wear and tear, while also adding land value.

Income Approach: The income approach determines the value of an income-producing property based on the income it generates. Typically, this is calculated by dividing the net operating income of the rent (gross revenue minus all operating expenses) by the capitalization rate.


Direct Approach: The appraiser takes comparable properties that have recently sold, and/or reviews active real estate listings, and then considers adjustments for differences. The variations among comparable properties will have a value determined by the appraiser based on market evidence. Example: If the property being appraised has 4 bedrooms, and a comparable property has only 3 bedrooms, an adjustment is made for the value of that extra bedroom, and the value is added to the property being appraised.

Are appraisers certified or licensed?
When it comes to being licensed, only three provinces require that appraisers hold a license: Alberta, New Brunswick and Nova Scotia.  This doesn’t mean the field is unregulated in other provinces, as there are associations such as The Appraisal Institute of Canada (AIC), which works with closely with provincial associations.  AIC has created a comprehensive curriculum its members need to complete to earn a designation of Accredited Appraiser Canadian Institute (AACI) or Canadian Residential Appraiser (CRA).

How to increase your appraisal value?

Having the highest appraised value of your home is essential for home owners. To increase this value of your property, here are a few pieces of information to consider presenting for your next appraisal:

  • Document renovations – Have a list of upgrades you have performed on the property to show the appraiser.  Before and after photos can also assist in showing upgrades, and how extensive (or not) renovations were.
  • Know your neighbourhood – It can come in quite handy to have some specific details about your local area.  If you know the values of a few homes in your neighbourhood, or recent sales, you can put these forward as comparables to the appraiser to assist in determining the value of your home.

Whether you are selling, buying or renovating your home, an appraisal can be required for the mortgage transaction.  Reach out to your mortgage broker today regarding your mortgage transaction.