Home appraisals in Ottawa

What a home appraisal is

A home appraisal is an independent, written opinion of the market value of a residential property as of a stated effective date. It is prepared by an appraiser who has no interest in the property or in the outcome of the transaction, and it is supported by evidence drawn from sales and listings in the local market rather than by an estimate offered from experience alone.

In Canada, residential appraisals are prepared in accordance with the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP), which sets the ethical and performance requirements that apply to the appraiser, including competency for the assignment, the scope of work undertaken, disclosure obligations, and retention of a work file supporting the report.

When a home appraisal is ordered

An appraisal is ordered whenever a decision turns on what a property is worth and the party making that decision needs an opinion they can rely on. The most common purposes in Ottawa are:

• Mortgage financing and refinancing, where a lender or an appraisal management company requires a value opinion before advancing funds. See lender and AMC appraisals.
• Estate and probate, where the value of real property must be established as at the date of death. See legal and estate appraisals.
• Separation and divorce, where the matrimonial home must be valued as at a date set by the parties or by the court.
• Capital gains reporting, where a value is required as at the date a property was acquired, changed use, or was disposed of.
• Employer-sponsored relocation, where a programme requires appraisals in a prescribed format. See relocation appraisals.
• Pre-listing and pre-purchase decisions, where an owner or a purchaser wants an independent figure before setting a price or making an offer.
• Property tax appeals and insurance, where a supported value is needed to make or answer a claim. See private and homeowner appraisals.

What the appraiser examines

Where the assignment calls for an inspection, the appraiser records the characteristics of the property that a purchaser in the market would pay attention to. These typically include the site and its location, lot size and configuration, the age and style of the dwelling, above-grade floor area and room count, the layout, the quality of construction and finishes, the condition of the building and its major components, basement development, garage and parking, and any additions or renovations. In rural areas, servicing arrangements such as private wells and septic systems are recorded, as they bear on value.

The appraiser also considers the influences acting on the property from outside its boundaries, including the character of the surrounding development, proximity to transit and employment areas, and any external factors that a purchaser would treat as an advantage or a drawback.

How the value conclusion is reached

Residential appraisals rely principally on the direct comparison approach. The appraiser identifies recent sales of properties that compete with the subject property, verifies the details of those sales, and adjusts for the differences between each one and the subject — differences in location, size, age, condition, and features. The adjusted figures are then reconciled into a single opinion of value, with the reasoning set out so that the reader can follow how the conclusion was reached.

Where the assignment requires it, the cost approach may also be applied, and for properties held to produce rent the income approach may be relevant. The approaches used, and the reasons for using them, are stated in the report.

What the completed report contains

A residential appraisal report identifies the property and the effective date of the value opinion, states the intended use and the intended users, and describes the scope of work performed. It sets out the description of the property, the market evidence relied on, the analysis of that evidence, the reconciliation, and the value conclusion, together with the assumptions and limiting conditions that apply, photographs of the property, and the appraiser’s certification.

Report formats include full-form, drive-by, and desktop reports. The format is selected to suit the intended use of the assignment rather than applied uniformly, and the format used is disclosed in the report. The process page sets out the stages an assignment moves through from request to delivery.

How an appraisal differs from other estimates of value

Several figures circulate for any given property, and they are not interchangeable.

• A comparative market analysis prepared by a real estate agent is a pricing tool used in the course of listing or purchasing a property. It is not prepared under CUSPAP and is not an appraisal.
• A municipal property assessment is prepared for property taxation purposes by the provincial assessment authority using a legislated valuation date. That date may not correspond to the current market or to the effective date required for an appraisal assignment.
• An automated online estimate is produced by a data model without an inspection of the property, and cannot account for condition, layout, renovations, or site-specific factors.

Where a value opinion is to be relied on by a lender, a court, a tax authority, or a party to a transaction, an appraisal prepared under CUSPAP by a designated member of the Appraisal Institute of Canada is the document that is ordinarily required. Further questions are answered on the FAQ page.