When Should a Property Owner Engage an Appraiser?
Do you know how much your property is currently worth? We’re not referring to the amount you paid for your home. Over time, the value of a home may change due to home improvements, infrastructure developments, and even landscaping. Getting your property reappraised is the only way to know what your property is currently worth.
What is a property appraisal?
A property appraisal is an impartial professional valuation of a property. A property appraisal will help determine the worth of your property based on the number of rooms, the square footage, its current condition, amenities, and the recent sales of similar properties in the area. An appraisal typically comes in the form of written documentation with a comprehensive description of the property.
Since a property appraisal aims to determine the exact value of the certain property at a given time and in a specific market, it must be performed by a professional property appraiser.
When should you engage a property appraiser?
A property appraisal is often essential when you’re about to make a significant financial decision that involves your property. You may want to get your property appraised when:
1. You want to sell your property
An appraisal is used in a home sale transaction to determine whether the property’s listing price is appropriate given the home’s condition, features, and location. During the appraisal, your property is usually compared to homes in your area with similar square footage, number of rooms, amenities, current condition, and other structures such as fences. The appraiser will then add or subtract value depending on additions or faults that aren’t comparable to neighbouring properties.
2. You want to refinance your home
When you refinance your home, you’re replacing your old mortgage with a new one because your property’s value has changed since you bought the property. If your home’s value has increased since you purchased it, you may be able to get cash out as part of refinancing. However, if the value has decreased, you may find it difficult to secure a second mortgage. For this reason, your lender will require a property reappraisal to assure them that they aren’t handing you more money than what your property is worth.
3. You want to get a home equity loan
Unlike refinancing your mortgage, home equity loans are a second loan on top of your existing mortgage. The amount you can borrow is largely based on the amount of equity you have after the remaining value of your mortgage is subtracted from the current value of your home. If your home has decreased in value, you may not be eligible for a home equity loan.
4. You want to take out another type of loan
When applying for loans such as business or cash loans, you may need to put up your property as collateral. In such cases, the lender may require you to get your home reappraised to determine its current value. You will need to show the appraisal documentation to the lender for your loan application to be successful.
5. You want to appeal your property tax assessment
In many provinces, property taxes are calculated based on the market value of your home. If the value of your home as listed on the property tax bill appears too high or if housing prices in your neighbourhood have declined, you may need to appeal the assessment. To appeal the assessment, you will need to contact an independent appraiser. A property reappraisal will help strengthen your case and ultimately lower your annual property tax.
6. You are going through a separation or divorce
Determining the value of all joint property is a crucial step during a divorce or separation. This estimated value will act as a point of navigation for asset division, depending on what you decide to do with the property. For example, if you both decide to sell your home, the money acquired will be split fairly between you and your former spouse. On the other hand, if one of you decides to keep the house, that person must come up with the money to facilitate an equity buyout.
7. The property owner has died
The Date of Death Appraisal, also referred to as the Date of Death Valuation, is a real estate appraiser conducted after a property owner dies. This appraisal determines the property’s value, whether the estate owes taxes, the amount available for inheritance distribution, and whether there are sufficient assets to pay creditors.
8. You want to ensure capital gain tax is calculated fairly
Capital gain is the difference between the amount you sold a property for and the original purchase price. In Canada, 50% of a capital gain is taxable. This means you will need to add half of your capital gain to your income. The amount of additional tax you’re required to pay will vary depending on how much you’re getting from other sources of income.
Are you looking for a property appraiser in Vancouver?
Are you thinking of selling or refinancing your property and want an appraisal?
At Adlaw Appraisals, our professional appraisers have the experience and education to give you an in-depth analysis of the value of your home.
Call us today to learn more about our services or order an appraisal online.