Frequently Asked Questions:

What does the “CRA” designation signify
The Canadian Residential Appraiser (CRA) designation is awarded to candidates who successfully achieve academic standards put in place by the Appraisal Institute of Canada (AIC). The AIC works in conjunction with the University of British Columbia’s Saunders School of Business, which offers a distance learning program to suit individual needs. Current education requirements now require the candidate to have a post secondary degree from a certified institution along with successful completion of the required courses within the CRA program. Upon achieving this designation, the member most continue to recertify their designation, where credits must achieved over a five year life cycle. The continuing professional development (CPD) program, improves each member's skills, knowledge and abilities throughout their career. The Appraisal Institute of Canada was founded in 1938 and is considered by most as the premier real property valuation association of Canada. The designations granted by the AIC include: Canadian Residential Appraiser (CRA) and the Accredited Appraiser Canadian Institute (AACI). The membership is further broken down into the follow segments: designated members, candidate members, student members and associate members

What does a Real Estate Appraiser do?
Often times, the homeowner only witness a very small portion of the real estate appraisal process. Once the appointment is scheduled with the property owner/tenant, the appraiser conducts a market review on the subject property and surrounding regions. Prior sales, previous and expired listing on the subject dwelling must be investigated during all valuations. Professional standards require the appraiser to search back a minimum time of thirty six months, in an effort to investigate previous market activity on the subject property. Comparable properties that have been sold in recent times will be investigated when completing the appraisal assignment. When conducting the site visitation, the appraiser makes detailed notes concerning the neighborhood, amenities offered, analysis of the site, observations of major components within the dwelling, interior and/or exterior photographs along with appropriate measurements. Upon return to the appraiser's office, this is where the bulk of the time is spent completing the appraisal report. Depending on the type of appraisal assignment, the length of the residential appraisal report varies from 10 to 40 +/- pages. The turnaround time for a typical standard residential appraisal report generally is two to four business days, barring any unforeseen circumstances. The appraiser can complete valuations for a number of circumstances, which include: desktop valuations, vacant land appraisals, limited appraisals (identified by some lenders as "Drive-by's), standards residential valuations, land valuations and corporate relocations appraisals.

How long does it take?
For typical dwellings, the site visitation typically lasts approximately 30 to 60 minutes, which is solely dependent on the type and classification of the property. During this time, the appraiser will ask the property owner several qualifying questions in an effort to gauge the overall condition, quality and general upkeep for the subject property. The appraiser is required to take detailed field notes pertaining to the fit and finish within the dwelling along with noting any unique features, deficiencies or influences that may affect future marketing of the dwelling. In most instances, expect to have the appraisal report completed within 24 to 48 hours after the initial visitation. In truly unique residences, this process can take much longer due to the degree of investigation that is requires for the final report.

Why have an appraisal completed?
An appraisal is an unbiased estimate of value given for a given point in time. Appraisers are never paid on contingency, upon meeting a certain value. There is a wide variety of reasons why an appraisal is conducted. The most common reason for request an appraisal is for mortgage lending purposes however other purposes include: pre listing purposes, pre purchasing decisions, estate planning, estate settlement, investment planning, capital gains, tax purposes, insolvency, bankruptcy, judicial, power of sale, foreclosure and new home construction.

Is an Appraisal the same as a home inspection?
Simply put, the role of the appraiser is to observe various characteristics within the dwelling, while the role of the inspector is to physically inspect the condition of the major systems and components within the dwelling. The appraisers duty is to compile his/her field notes into a appraisal report in an effort to estimate the market value for a certain period of time as opposed to a building inspector who provides their clients with detailed information in regards to overall condition, utility and general upkeep within the dwelling. Those items that a home inspector may consider includes: structural components, exterior roof system, plumbing system, electrical systems, heating and air conditioning systems. The appraiser’s role is to compile a set of field notes in respect to the fit and finish of the dwelling and to record the various types of components within the dwelling. Unless otherwise informed, the appraiser assumes that all major components are in operable condition and it is beyond the scope of the appraiser to determine the condition of those major systems that a home inspector would analyze.  The appraiser’s due diligence is to report any physical deficiencies within a dwelling and to estimate the overall impact of the deficiency. Typically, the appraiser is not an engineer, architect, plumber, electrician, lawyer, or property surveyor. When appraising a property, the appraiser does not guarantee the condition, however the appraiser will ask the property owner about any visible problems and gauge any impact on value with respect to the problems. It is advised that an expert be notified if there are questions concerning structural integrity or mechanical aspects of the property. In Nova Scotia, all appraisers must be licensed, which means that they have fulfilled rigorous training and development along with education and experience requirements that is put in place by our local association in conjunction with the Appraisal Institute of Canada. All members must furthermore adhere to the strict industry standards and professional ethics required by the Appraisal Institute of Canada.

Will my appraisal have an impact on my property assessment value and will the assessment authorities find out the result?
A common question that is commonly asked is whether the assessment department has access to our appraisal records. Unless the appraiser is working on behalf of a home owner in respect to an assessment appeal, the assessor will never see the appraisal report. Furthermore, it is up to the appraiser to ensure that confidentiality is forefront for each and every appraisal report and unless the client grants permission for the appraiser to provide a copy of their report to a particular individual, the appraiser hands are tied in respect to future distribution of the report. Please refer to the next question which pertains to identifying the client.

Who is the client? Can I have a copy of the appraisal report?
One of the most commonly asked inquiries to the appraiser is by the home owner requesting to obtain a copy of the appraisal report. A frequent misconception would be for the home owner to respond in a manner “since I am paying for the report, therefore I have the privilege to obtain a copy.” For all appraisal reports, the client and the applicant must be clearly identified. The client is generally the individual who will be relying on the report for the intended purpose. In some instances, the client may not pay for the report but will rely on the findings within the document. Some intended uses of the appraisal report include: for first mortgage lending purposes, distribution of matrimonial assets, for estate planning or to establish the current market value for the relocation process. The client typically engages the relationship with the appraiser and relies upon the final estimate of market value

The appraiser must get authorization from the client (example “X.Y.Z. Financial Institution”) before the applicant can obtain a copy from the appraiser. Often times, it is more beneficial for the property owner to directly contact the client to expedite the process. The client has total responsibility for granting authorization and permission for other individuals to rely on the report once it has been completed. Another example would be if a home owner asked for an appraisal to be completed on their dwelling for “X.Y.Z. Financial Institution”. Once again, the client is identified as “X.Y.Z. Financial Institution”, while the home owner is the applicant. In matrimonial disputes, it is common to have one appraiser is working for one spouse and another appraiser working for the other spouse; the appraiser cannot release the report to the other spouse unless the original client (who ordered the assignment) grants permissions.

Is there any relationship to assessment verses market value?
Another common myth is that there is a direct relationship between the assessed and market value. A common question that is often asked by our client is- what impact does my assessment have on the current market value? In short, it truly depends on a number of key criteria in respect to estimating the value of an individual’s property. Key variables include but are not limited to: property condition, ongoing improvements, recent sale transactions and local market conditions dictate the present assessment for a dwelling. Keeping this in mind, for Nova Scotia, the base date is two year prior to the current date of valuation. So, if you receive your 2009 assessment notice, this figure is based on Jan. 1st, 2007 sales information. In many instances, the assessed value is typically lower than the current market value due to the fact a property may appreciate over time within an active market. In those markets where values are depreciating due to unstable economic conditions, a property could be over assessed based on previous sales data. In closing, the assessed value for a particular property has no bearing on the final estimate of value however it can be used as a tool to illustrate what the ongoing market conditions may have been like during the time of assessment.

Does the purchase price always equate to the final estimate of market value?
A common misconception by purchasing parties is that the purchase price ALWAYS equates to value. If this we the case, there would never be a need to have an appraisal completed on your property. Let’s first consider the definition of Market Value provided by the Appraisal Institute of Canada
"The most probable price for which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus." IF a buyer is not cognizant of his/her local market and surrounding conditions, there is a strong likelihood that they might overpay for a specific property”.

An important element within the real property appraisal process is the overall relationship between cost and value. In essences, the cost that a property may be acquired for may not be representative of the true market value or ongoing conditions within the specific market. Motivation can be another variable within many real estate transactions. Items that can influence the final price include:

Is there is a relationship between the purchaser and selling party?

Is the seller forced to relocate and is required to sell the home quickly?

Is there undue stress or severe financial problems with the owner?

Other factors that must be considered include: a purchaser might be willing to pay a premium for a property due to local amenities offered and/or being within a desired neighborhood. 

In short, it is the role of the professional real estate appraiser to distinguish if the specific price that has been agreed upon is reflective within the local marketplace, keeping in mind the true definition of market value.

How to prepare for an appraisal as a property owner?
The appraiser should have access to all rooms, doors, hatches and closets. The appraiser should able to inspect the major systems of the home, such as the: furnace, electrical panel, hot water heater and other built in components. The exterior of the dwelling must be measured; therefore a clear path around the perimeter of the dwelling would greatly assist the appraiser during the measuring process. Access to current property tax assessment information, plot plan, site survey and list of improvements to the dwelling along with associated costs would assist the appraisal process. We are not housekeeper nor do we evaluate your home based on cleanliness!

What can I do to assist in the appraisal process?
We appreciate that time is a very important element within the Real Estate appraisal process. Several items are suggested to aid within this process, which in turn will reduce turn around times.  A recent survey of the house and land, location certificate or plot plan, a deed showing the legal description, a copy of the original building plans, recent tax bill and a detailed list of improvement completed by the present owner. A cashers’ cheque or money order as payment for the appraisal would also greatly reduce turn around times.

How are measurements taken?
The dwelling is measured from the exterior to determine the overall dimensions and total living area of the dwelling. The rule of industry practice is to only consider areas that are located above grade for the main living area (MLA) total square footage calculation, keeping in mind that only fully finished sections are included in this calculation. For areas that may be undeveloped (such as garages, decks, workshops or storage sheds) the appraiser will consider these items in another portion within the appraisal report. The basement area will be considered in the below grade calculations. When valuing a single unit condominium, measurements are taken from the center of demising wall within the interior of the suite. Balconies, garage and storage lockers are not considered living area for a condominium suite.

How do ethics and conflicts of interest impact the appraiser?
The appraiser pledges to conduct business in a manner that is not detrimental to the client, institute, or the real property appraisal profession. Members’ relationships with other members and other key stakeholders ought to depict courtesy, good faith along with showing respect for the institute and practices and regulations. In all cases, the appraiser is independent and objective while our duty is to only accept assignments within out scope of expertise. All working files must be kept for a minimum of seven years and assignments cannot be accepted on a contingent fee basis. The Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP) also defines as unethical the acceptance of an assignment that is contingent on "the reporting of a pre-determined result (e.g., opinion of value)," "a direction in assignment results that favors the cause of the client," "the amount of a value opinion," and other things.  This means you can be assured we are working to objectively determine the home or property value. You can be assured of 100 percent ethical, professional service.

What is a conflict of interest?
A conflict of interest arises when there is a possibly of direct/indirect involvement with the property or individuals that are involved. If this does occur, it is the appraiser’s due diligence to directly notify the client and to decline the assignment and any other immediate appraisal activities on the subject property. Also, for all subsequent requests on a former appraised property, the appraiser must require permission by the original client- regardless of the time frame.

What is market value?
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming that the price is not affected by any undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised with each acting as they consider in their own best interests; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with this sale.
"The most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."
- Appraisal Institute of Canada

What will pay off the most when renovating?
The Appraisal Institute of Canada has developed RENOVA, an interactive web-based guide to the value of home improvements. RENOVA is designed to give consumers a better idea of the return on investment they can expect for a variety of home improvements. RENOVA does this by providing a payback value range derived from the cost of the improvement expressed in dollars.
Click here: http://www.aicanada.ca/e/resourcecenter_renova_all.cfm

What is an appraisal?
An appraisal is a formal and impartial estimate or opinion of value, usually written, of an adequately described property, as of a specific date, and supported by the presentation and analysis of relevant data. It is prepared by a qualified individual for reliance by identified parties for which the appraiser accepts responsibility.

Other common terms:

The Professional Real Estate Appraisal
An appraisal is an objective estimate of the value of an adequately described piece of property, supported by the collection and analysis of relevant, factual data and is made by a person who has sufficient knowledge, training and experience to accurately estimate its value.

Arms length transaction
An arms length transaction is one in which both seller and purchaser act completely independently of each other and have no connection or relationship to each other.

Comparable sales
A comparable sale is a property that is similar to the subject property in most respects, is located in a similar (nearby) location, and has sold recently at arms length. The selection of comparable sales is in most residential appraisals, the single most important determining factor in establishing value. It is the appraiser’s responsibility to adequately research the local real estate market and determine which comparable sales best represent the value characteristics of the subject property.

What are the steps in the appraisal process?
Observations of the site and dwelling: A detailed analysis of the site verifying the location of the site improvements, type of property, layout, room count, number of rooms, basement finish, other site improvement such as shed, decks, garages, and to establish the condition, quality of the exterior and interior. The exterior of the dwelling is measured to accurately record the size, physical, location and functional variables are noted that may affect the overall value of the property.

Data Collection: Information pertaining to the location, city/town/village, neighborhood, infrastructure available, the address, property identification number, zoning, land use, site dimensions, site area, taxes, property assessment, age of dwelling, purchase price and sales date(s), previous MLS history, current market data, recent comparable sales, active listings, expired listings are all gathered and scrutinized.

The approach to value: There are three approaches to value are identified as: Cost, Direct Comparison and Income Approaches.

The Cost Approach is typically used for new home construction, when an established land value can be determined along with the total construction costs (not only for the dwelling but existing site improvements). This method of valuation is most accurate when dealing with a new home construction that is located within a developing subdivision, since land sales are readily available. The Cost Approach is rarely used on older dwellings due to the fact there is often an extreme difficulty in estimating accrued depreciation in older homes, there may be unique construction techniques evident in the dwelling, along with a lack of recent comparable land sales.

The Income Approach is utilized when the appraiser deals with income generating characteristics, which is typically evident within a multi family dwelling. Present worth of the income and expenses stream are carefully considered along with net operating incomes, gross rent multipliers and capitalization rates when applicable. Simply put, if a property is capable of generating income, the Income Approach must be considered. Local comparable sales data reflect ongoing trends. 

The most common approach that is used in residential real estate appraisal is the Direct Comparison Approach. This is based on the selling price of comparables properties in the region and these sales are then adjusted for variances such as: location, physical and time differences. The appraiser researches the most similar available transactions, also known as “comparable sales”, while active listings and expired listings are researched in an effort to determine overall trends and values within the locale being appraised. During many occasions, the details of the market data are verified. Using our knowledge for the variances such as dwelling size, features, upgrades and other characteristics that enhance value, the differences between the comparables sales and the subject dwelling are adjusted for. Typically an agreement among the comparables sales used creates a range of value that is most probable that the proper may sell during the effective date of appraisal.

Final Estate of Value: The final estimate of value can either be a range of values, a single point value or an indication of value, such as “not greater then” or “not less then a specified amount. When determining the Final Estate of Value, the appraiser selects the value by placing greater weight on one or more comparable sales or equal weight for all sales used based on a variety of criteria.  
                                                                                                                 
Completion of Report: The latest technology devices are utilized to prepare report in a timely manner for all clients. Addendums to the appraisal report can include: interior / exterior photos, city/town maps, neighborhood maps, plot maps, comparable sales map, images of comparable sales and active listings, and exterior sketches of dwelling, floor plan, and so forth. The entire report is reviewed and then signed by the appraiser. Soon after the outcome is communicated back to the client and the report is next delivered.

Rural appraisals: In the appraisal process, rural and urban properties are very different and must be treated accordingly. During all valuations, social, economic, cultural and environmental influences are considered. It’s important to have a rural appraiser when determining the final estimate of value on a rural dwelling. There are many variables at stake and you can ensure that you have a dedicated, experienced rural appraisal that provides a supportable report with relevant data and a through analysis.

Custom measuring services: Do you require a detailed calculation on the overall size of your home? We offer a measuring service that suite the needs of each type of property. Our latest software and sketch programs that delivers a very detailed analysis and we can utilities square feet or square meters.

Ten reasons why it is beneficial to hire a designated member with the Appraisal Institute of Canada:

1) Independent, Objective Valuations:

2).Solid Professional Training:

3) Proven Valuation Experience:

4) Career Commitment:

5) Ongoing Professional Development:

6) Self-Regulation:

7) Ongoing Partnership With Lending Community:

8) Public Interest:

9) Universal Acceptability: