Is there a difference between Real Estate Appraisal and Evaluation?
Absolutely! And though most people perceive the two terms as synonymous and they are similar processes, they have in actuality glaring differences.
Residential real estate valuation may be essential for a number of purposes; starting from buying and selling these stretch to taxation, to use as collateral, (bank related), decision making (such as for investment) and others.
While both Evaluation and Appraisal are ways to arrive at an estimate of the value of real estate, the distinctions in the Canadian context, as pointed out by UCAS real estate appraiser Toronto are:
- Appraisals can only be conducted by certified professionals ... Evaluation has no such requirement. It may be done by any of the involved – the buyer, the seller, brokers, agents.
- Appraisalsrequire detailed analysis of all the property's features, with an accompanying detailed report that also must contain a summary of the logic used (e.g. why a particular methodology was employed) to arrive at the estimate being reported. Even snap judgments may constitute Evaluations.
- Appraisals may be insisted upon by statutory bodies and banks in Canada (although in cases mere evaluation might suffice).
- Evaluation is the starting point for the more complex process of appraisal.
Role of Residential Real Estate valuation
While Appraisals are almost always useful for some stakeholder or the other in any commercial real estate deal, it may not always be so case in the case of residential real estate. Consider these situations:
- When perceived values match in buyer-seller transactions
- When buying directly from the builder (not a resale situation)
- When the “Market Value” is well established and easily obtained. This happens when such homes are of a type (example: flats of standard design) and (importantly) when they are being bought and sold in numbers.
- Is the residence of sufficient value?
In such cases an Appraisal may be unnecessary.
But what if:
- The property is one of a kind?
- It has special features? (e.g. Location; or, extras such as additional building – barns on a farm; garage parking)
- It is going to be a high-value transaction such as an entire floor in a high rise?
- Its Market Value is indeterminate?
Appraisals may be the only way out. But there are many methods of Appraisal and Residential Real Estate Appraisers would likely oblige with a lower cost way of estimation.
It is important to note however, that appraisals are expert estimates of the value of a particular property at a specific point of time (date) and their validity declines with passage of time.
UCAS is one of the leading real estate evaluations & appraisals company providing accurate, reliable, independent & a range of specialized appraisal services by fully accredited appraisers. UCAS Real Estate Appraisal based in Ottawa, Toronto & Montreal Canada.
Enquire now for a free consultation & quotation.
Visit at https://ucas.ca or call at +1-888-959-7691