During Financial Literacy Month, the Appraisal Institute of Canada encourages property owners to do their own due diligence to determine the real value of their property. There are several instances where an unbiased, thorough, third party opinion of market value of a property prepared by an AIC designated appraiser can provide property owners with invaluable insight:
- Refinancing/Re-amortizing – The COVID-19 Pandemic has made Canadians look at alternative funding arrangements, such as refinancing their property for additional cashflow or to lower payments after a mortgage deferral. An appraisal can help you determine whether or not you have enough equity in your property to explore those options.
- Buying a property – When you buy a home, one of the bases for determining the amount of your approved mortgage is the appraised value of your home. That means that it is the appraised value – not the purchase price – that the lender uses to determine the maximum amount of the mortgage loan. It is recommended that you work with your lender to hire an AIC designated appraiser to complete an independent appraisal on a property you are purchasing before you sign the purchase agreement.
- Selling a property – If you want to determine the best listing price for your property, it is worthwhile to engage an AIC designated appraiser to provide an independent opinion of value based on comprehensive market research.
- Planning your estate – If you have real estate that you want to bequeath, an independent valuation will be useful to ensure that this asset is fairly distributed to your beneficiaries. If you prefer to leave your estate to a charitable organization, then the market value of your property will be required as well.
- Retirement planning – If you want to determine the value of real estate holdings in your wealth to plan for your retirement, an AIC designated appraiser is able to determine the value of your current real estate as well as provide consulting advice to enhance your financial portfolio with a good real estate investment.
- Litigation – If you are in litigation and property is involved, engage an AIC designated appraiser to provide an expert opinion on the value of the property. For example, there may be a matrimonial (divorce/separation) division of property or assets, shareholder disputes or a situation in which the market value of the property has an impact on the legal settlement. AIC-designated appraisers are recognized experts within judicial and quasi-judicial settings.
- Property tax assessment appeals – In most provinces, if you don’t agree with the value of your property used to determine your property taxes, an AIC designated appraiser can prepare an appraisal and provide you with the support you need to make your argument to the assessment authority.
- Renovating – If you plan to update your home with a significant renovation, be sure you are investing in the right upgrades. There is an assumption that any money you invest in a renovation will be fully returned to you if you sell the property. That is not always the case, and an AIC designated appraiser can assist you in determining the real value of your property with the renovations you are planning.
- Capital Gains – If you want to be sure that the capital gains that you are reporting are based on a fair market value, engage an AIC designated appraiser to give you the peace of mind that you are paying a fair amount of tax on the disposed property.
- Insurance coverage – An AIC designated appraiser can complete an appraisal for insurance purposes that can be used by you and your insurance company in the event of damage to your property. This is a great way to document the details of the property before a natural disaster or other unfortunate event occurs and can expedite your claim during a time that is often very difficult for your family.
“An unbiased opinion of value provided by a qualified, designated appraiser provides property owners with one more piece of information that they can use to make an informed decision about one of the most significant investments that most Canadians make – their home,” states Jan Wicherek, AACI, P. App, President of the Appraisal Institute of Canada. “Our best advice is that if any financial decision involves real estate, you should involve a designated appraiser.”