THE VALUE OF A REAL ESTATE APPRAISAL

Real Estate is a complex form of investment. Unlike the stock market, for example, in which stock units are priced equally and there is an open market for shares, many factors affect real estate values. As well, the market for individual properties is often limited. In addition, every property has characteristics that make it unique, whether it is a home, an apartment building, a farm or a commercial use of land such as an industrial, office or retail.

Choose a Professional, the events of recent years have shown that real estate is not always a safe or stable investment. It is important then to consult with a qualified, professional real estate appraiser when you need an informed and objective opinion on the value of a property.

Get the facts, and the research to back them up, from a trained professional appraiser who is a member of the Appraisal Institute of Canada.

Appraisal Institute members work both as independent, fee-for-service appraisers and as staff members with public bodies and lending institutions.

THE REASONS FOR AN APPRAISAL

There are many situations in which it is vital to know the value of a property:

To estimate current equity, or market value for purchase or sale
To obtain financing
To aid in investment and business decisions
To confirm government values in tax and capital gains assessments
To estimate value for expropriation compensation
To serve as a basis for equitable settlements of estates and property in litigation
To estimate value for insurance claims or coverage

Members of the Appraisal Institute of Canada may also provide additional real estate consulting services and expertise such as highest and best use analysis and market research studies.

THE APPROACHES TO VALUE

Appraisal practice relies on an established body of knowledge and accepted technical approaches to estimating property value. There are three common methods of valuation.

The Direct Comparison Approach - The value estimate is based on the analysis of selling, listing or offering prices of comparable properties.

The Cost Approach - Based on the depreciated cost of buildings and improvements plus the estimate of land value.

Income Approach - Based on the premise that value is equivalent to the worth of the income stream when a property is developed to its highest and best use.

The appraiser will use any or all of these approaches to value as is appropriate