Whether you are buying or selling a home, the process is extensive and requires a lot of things you have to do. One of them include opting for a home appraisal in Ontario.
It is one of the most important components of buying or selling a home, and here is what you must know about it, as explained by our real estate lawyer in Ontario.
What is a Home Appraisal?
In simple terms, a home appraisal is a process that helps determine the value of any property. While this sounds simple enough, a lot goes into determining the appraised value of a piece of real estate property.
Your mortgage broker will require this to ensure that their risk is limited when approving you for a mortgage. As mortgage rates in Ontario have been rising, the appraisal process has become significant to lenders.
A house appraisal can be done on any type of property, such as:
- Condos
- Detached townhouses
- Semi-detached townhouses
- And much more
Condos are the easiest to appraise. On the other hand, detached homes require more time and knowledge as it can include the appraisal of various features such as garages, pools, and more.
Home Appraisal vs. Home Inspection: What is the Difference?
Most people confuse home appraisal with home inspection. However, they are quite different.
Home appraisals determine a property’s market value. On the other hand, a home inspection guarantees that the home’s structure, roof, and other components are working and safe.
Depending on your preference, you can conduct a home inspection before or after the house appraisal.
When is a Home Appraisal in Ontario Needed?
A home appraisal in Ontario will be needed if you require a mortgage to buy a home. You have to place a bid on the seller with your offer, and they must accept it before you can get the home appraisal.
However, this has to be done before your mortgage is finalized. The lender will use the appraisal results to guarantee that the house is worth the money it is lending to you.
On the other hand, if you don’t need a mortgage or purchase the home in cash, then you might not need a home appraisal, but our real estate lawyer in Ontario still recommends getting one.
You will also require a house appraisal during divorce proceedings, making insurance claims, property tax appeals, refinancing a property, and more.
Home Appraisal Ontario Cost: How Much is it & Who Pays?
A house appraisal in Ontario can cost anywhere between $300 and $1,000 upwards. Yes, it is an investment, but it can help you make a better decision regarding buying, selling, or refinancing properties.
Generally, the homeowner or buyer looking to refinance or finance will pay the home appraisal cost. However, some of the lenders can also pay this cost directly.
On the other hand, if you are going through divorce, separation, or litigation, the requesting party is responsible for paying for the home appraisal cost.
You can contact a real estate lawyer in Ontario to learn about house appraisal costs and other closing costs when buying or selling a property.
How to get a House Appraisal in Ontario: The Home Appraisal Process
The home appraisal process begins after the buyer and seller agree on a price and sign an agreement. Once the agreement is signed and finalized, the lender will send a house appraiser to determine the property’s market value.
However, it is up to the seller to decide whether they want to get an appraisal before listing. This means they will conduct the appraisal before any negotiation to remove the unpredictability of a lower value after signing the agreement.
Please note that the pre-listing appraisal will remain the same until the closing, as it will remain the fair market value of the home.
As a buyer, here is what the house appraisal process in Ontario will look like for you:
- Beginning: The process will begin after you make an offer on a home and the seller agrees to it.
- Evaluation by house appraiser: The appraiser will evaluate the house based on various factors, such as size, design, location, and age.
- Market Analysis: The house appraiser will compare the property to similar homes recently sold in the region.
- Appraisal report: The final report will be created based on the home’s market value.
4 Surprising Factors that Can Affect a Home Appraisal
When you decide to hire a home appraiser, they will visit your property and the neighbourhood to make a fair assessment. Here are the top four factors that they will take into consideration for their report, which will affect your home appraisal:
1. Features of your House
One of the top things that will affect the home appraisal value will be the features that make your home. These include, but are not limited to, the following:
- Number and size of bedrooms, living rooms, and bathrooms
- Appliances
- Fixtures with premium materials
- Utilities
- Gutters
- General construction
- Roofing
- Available parking areas
- And much more
Even unique features such as a swimming pool will be taken into account. The home appraiser will measure and assess every feature.
2. Market Trends of the Local Region
The local housing market trends and the general economy will affect the value of your home. For example, let’s say the current market has a high number of sellers.
In such a scenario, home prices will go down, and buyers will have an advantage. On the other hand, if there are a few houses and more buyers, the prices will increase.
A professional house appraiser will consider these trends to determine your home’s value.
3. Similar Properties in the Area
During the home appraisal process, the appraiser will also examine similar properties in your local area. Appraisers do this to compare the value of similar properties and gauge the value of yours.
They will also look at the most recent sales of comparable properties to see what value they were sold at. Then, the appraiser will compare the features to make an accurate comparison.
4. Features of the Neighborhood
Your neighbourhood and its features will also be important during the home appraisal process. Based on the neighborhood features, different types of people prefer different locations.
For example, new parents might be looking for homes in neighborhood with good schooling. So, the proximity to parks, schools, public transit, and more will be taken into account as they all impact the value of the property.
What Hurts a Home Appraisal in Ontario: Top 7 Factors
Yes, certain factors can also negatively impact the valuation of your home. It can result in a lower value than what you would expect.
Here are some top factors that will hurt a home appraisal in Ontario:
- Old Features: If the home has old features or outdated designs, then the appraiser will value it lower than those ones with modern features and amenities.
- Located in a Less Desirable Neighborhood: The location plays one of the most important roles in appraising a home. If the home is located in a less desirable neighborhood, such as in areas where the crime rate is high, then the value will be lower.
- Poor Condition or Damage: Damaged homes or ones in poor condition will also have a lower value. Poor conditions and damage can include issues with structure, old electrical systems or plumbing, roof leakage, and more.
- Economic Conditions: If there is a housing market downturn or a recession, then it can have a negative impact on your home appraisal.
- Illegal Additions: If you illegally any modification or addition to the house, then its value will also decrease. These can include illegal knob and tube wiring, DIY renovations, and more.
- Lack of Curb Appearance: The home needs to look good from the inside and outside. The appearance from the street will also affect its value. For example, a lack of landscaping, no yard maintenance, and a poor exterior will all lead to a lower home value.
- Current Sale Prices: The house appraiser will also take the selling price of similar homes in the area. If the current sales have a decrease in values, then it can possible lead to a lower assessment for your home value too.
How to Ensure an Accurate Home Appraisal Valuation
Are you afraid of a low valuation of the property? Well, there are certain things you can do to ensure the most accurate home appraisal value.
Here are the top steps you can take to prepare for a house appraiser to come to your home:
1. Fix and Repair Issues in the House
A home can always be improved by making small repairs and changes. If your home needs repairs, then this is the time to make them happen.
For example, you can repair any damaged walls, fix leaky pipes, replace any broken windows, and more. You must do all of this before the house appraiser shows up.
If your home is well-maintained without such issues, then its home appraisal value will be relatively higher.
2. Tidy Everything Up
Before the house appraiser comes, it is crucial that you deep clean and declutter your home. It will ensure that the appraiser views the home in a positive light.
A clutter-free home can also ensure they notice any features of your home that can increase its overall value. You can do this by deep cleaning carpets, polishing counters, and removing any unnecessary obstructions throughout the home.
3. Inform About Neighborhood Features
It is crucial to provide accurate information to the house appraiser. This is why you must inform them about neighborhood features during the home appraisal.
For example, if the neighborhood is close to various parks, schools, public transit, or recreational places, then you must inform the appraiser about them.
4. Create a List of Upgrades
If you believe a few upgrades could increase the value of the home, then we recommend you make a list. These can include anything from an updated kitchen to a new roof.
Create this list and provide it to the house appraiser to take this into account as well.
5. Offer Documentation
Keeping a home requires constant upkeep. If you have made any new renovations or upgrades, be sure to keep the documentation.
You can give the documents to the appraiser during the home appraisal to show how much work happened and what its cost was. Save things like receipts and the like to show the appraiser.
6. Be Present During the Home Appraisal
It is crucial for you to be present during the home appraisal. The house appraiser may have questions and will turn to you to provide information and answer any questions.
You must let them know of the slightest thing that could impact the value of the home. Once you do, they will be in a much better position to appraise the home fairly.
7. Keep People and Pets Away
Please don’t have a lot of people over during the home appraisal and make sure you are present without any extra people. The more people there are, the more difficult it will be for the appraiser to carry out the process.
If you have any pets, then make sure they are also outside the house or somewhere else. Doing this will ensure that the house appraisal process goes as smoothly as possible.
What Can You Do if the Home Appraisal Value is Low?
You can do everything possible, but sometimes the appraisal value can turn out to be low. If it is lower than the sale price, then there are some things you can do to ensure a fair value, which can include the following:
- Ask your lender if you can have a second appraisal (if you pay for it)
- Renegotiate with the seller about the price
- Reapply with another lender and hope that you will get a higher value during the second appraisal
Please note that there is no guarantee that even the above methods will lead to a higher home value.
Will Renovations Impact the House Appraisal?
Homeowners may have the misconception that renovating the house will automatically lead to an increase in value. However, not all such renovations will lead to a higher room.
For example, a home gym is costly and will only increase the resale value if the potential buyer shares the same interests. As a general rule, the house appraiser will look at the overall appeal and functionality of the renovations you make.
On the other hand, low-quality renovations or additions will not increase the value of the home or lower it.
However, some renovations you can make to possibly increase the appraisal value can include the following:
- Finishing a basement
- Adding a modern deck
- Repairing or replacing the roof
- Adding energy-efficient solutions within the home
- Adding smart home technology throughout the property
If your home has old or outdated technology, then these changes can help with a potential increase in your home’s value.
FAQs
How much does it cost to get a house appraised in Ontario?
A house appraisal in Ontario can cost anywhere between $300 and $1,000 upwards.
What does a house appraiser look for in Ontario?
A house appraiser looks at the age, location, damage, market trends, HVAC system, roofing, plumbing, exterior, and much more of the house. All of this is taken into account when determining the home value.
How long does an appraisal take Ontario?
A home appraisal in Ontario can take anywhere between half an hour to a few hours. The appraiser will then make a report and send it to the homeowner or lender within a few days.
What happens if appraisal is lower than offer Ontario?
If the appraisal will be less than the offer, then the lender will only fund the mortgage based on the appraisal value.
Contact Our Real Estate Lawyer in Ontario for Your Home Purchasing or Selling Needs
If you want a knowledgeable and trusted real estate lawyer in Ontario by your side, then be sure to get in touch with Athena Narsingh. We can help ensure you get the best appraisal value for the home.
For more information, schedule a free consultation with us today.
Author Profile
- Athena Narsingh is a trusted and knowledgeable lawyer in Scarborough. Her expertise spans real estate law, family law, adoptions and fertility law. A lawyer by profession and a humanitarian by heart, Athena Narsingh wants to help people become more familiar with the legal system and be well-informed to make important legal decisions.
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