Frequenty Asked Questions

My bank said my property was worth $$ and the appraiser came in way lower, what gives?

Respectfully, the banker is a banker, and not a full time real estate appraiser. While they may watch their local real estate market more than other professions, their job does not require them to do so, or for time based reasons, even allow them to. A full time employed real estate appraiser that is active in your market, is aware of what is happening (or not) in your market place with the reviewing and use of the most recent comparables possible. It would also not be appropriate to rely upon appraiser advice on how bridge financing works, or how the lending practices work for a given lending institution. There is the odd occasion where a given local bank branch may be privy to more current information (where they have a mortgage application on their desk, but the list realtor has not yet updated the MLS system to a new sold status), and in that case, where the MLS database is not yet updated, it is possible that more up to date sales information is available. It is also important to note that for "residential financing purposes" (not commercial or agricultural), most banks will lend on a percentage of the contributed market value of one house, one garage (if there is one, and even then only up to a certain size), one set of site services, and then a certain amount of land (depending on who your bank is), and no more. The appraiser may be asked to list the value of the remaining land & improvements for information purposes, (and not lending purposes), but typically a value for the extra buildings will not be provided, unless asked for.

My bank has ordered an appraisal, and I'm paying for it. Will I get a copy of the report?

You should check with your bank and ask that question beforehand. A large majority of banks now use "appraisal management companies" aka brokers that are in between banks and appraisers, to order the appraisal. The appraisal management firm then assigns the work to a local appraiser based on their criteria ( sometimes location, sometimes turnaround time & quality metrics, sometimes price, sometimes a mix of all 4). The appraiser is contractually obligated to send the completed report back to the appraisal management company (who's acting as an agent for the lender), who then gives the report back to the lender that ordered the appraisal. Each financial institution has their own rules on whether the property owner / borrower receives a copy of the appraisal, (regardless of who pays for the appraisal) which is 100% beyond the control of the appraiser. If the appraiser were to do anything different than what has just been described, it's very likely the appraiser will not receive anymore work from the appraisal management company. and could possibly get sued for doing anything different = no longer in business.

Will a copy of my appraisal somehow end up in the hands of the local municipal tax assessment department?

Absolutely never, unless you personally give them a copy on your own. The appraiser provides the completed appraisal report to the organization or individual that ordered the appraisal, and no-where else.

I have a quarter section of land that also has energy industry lease income. Will that be factored into the appraised value?

It depends on who the appraisal is for. This appraiser does not know of any financial institutions or lenders that will lend money on the value of the lease income, and so if it's for a bank / lender, the appraiser typically has instructions to "not" include a value for that. However, if it's for your own purposes and you want it included, it can be. The appraiser would look for other quarter section comparable sales that also have energy industry lease income with a similar amount. Presumably, the buyer and seller agreed that the lease income was factored / baked into the purchase price.

Do I need to make sure my house is show home ready when the appraiser arrives?

The appraiser comes to your home to visually observe the condition and quality of your home both inside and out, ideally with / through the eyes of the average potential buyer, that would be interested in your area. If there is too much clutter & stuff on the floors, counter tops, etc, it's that much more difficult for that potential buyer to see what they might be getting if they were to buy your home. Buyers often look at various properties by comparing one to another against the price being asked for. The appraiser needs to get a good look at your home, in order to compare it to other properties that have sold recently in your area with respect to quality and condition. The better the appraiser is able to see quality and condition, the better job the appraiser can do, in arriving at a credible price range / value for your property.

Do I need to finish up repairs or renovations before the appraiser arrives?

Since the goal of the appraisal is to determine a fair market value of your home, the appraiser will observe any deferred maintenance / repairs, and / or renovations underway and estimate the cost to finish same, much like any potential buyer might do, when they look at your home. Often many banks give appraisers instructions on whether they want "as-is" values, or "as-complete" or both. If the purpose of securing an appraisal is not for bank financing, then you may only want one of the three options just mentioned, or for completeness, you may want all three. Talk to the appraiser about your own needs, before proceeding.

A house in my area sold last year for xxx. Why wasn't it used in my appraisal?

Most appraisals are done for financial institutions / banks / lending organizations. Most of these firms have requirements that appraisers must follow on types of comparable sales that can be used when appraising a property. The large majority of these firms want comparables that have sold within the last 6 months, or less. Some want comparables that have sold within the last 90 days from the day your home is visited by the appraiser. The closer a comparable sale happened to the day your property is being appraised, the better, as it generally is a more accurate read on the value of your home today. If your property is in a rural area where there are not many sales, the appraiser will potentially go back further than 6 months to find sales in your area, and make a time of sale adjustment if necessary, if the market was higher or lower at the time that comparable property sold. As well, an appraiser could go further afield geographically, to find comparable properties that have sold within the last 6 months, and if necessary, apply a location adjustment if market conditions and land values are different from the comparable sale's location to your home's location. The appraiser is attempting to make adjustments to comparables to make them look like your home as much as possible, with reliable data, using profession specific methods and formulas.

Why would I use an appraiser who doesn't live in my area?

I live in the Edmonton area as my wife holds a job in the metro Edmonton area. My territory generally encompasses Yellowhead County, Woodlands County, the upper part of Lac Ste Anne County, and all other areas mentioned on the territory page of this site. Why would you use me versus an appraiser that lives in your area? In some cases, there is no appraiser in your area, but even if there is, I am in the counties just listed, doing 40-50 appraisals per month, every month for 3 - 4 different banks. I'm plugged in, and informed on what is happening in your area, with respect to market values, because of the volume of work that I do.

Another very important point documented by fact, is that I have no financial interest whatsoever in property values in the territory that I work in, since I don't own property there. My one and only goal, on every file, is to produce a credible / accurate range of values when I appraise a property. I'm not saying that appraisers that do live in your area, have different goals. I'm just promoting what I can offer, and it's up to you to decide if what I have just mentioned here, makes sense to you.

While I may not live in your area, I do spend money in your local economy. I stop for gas and food on a regular basis where-ever my travels take me, which adds up to a considerable sum of revenue that gets pumped back into your local economy every month. I'm sure the owners of your local gas stations, restaurants, and convenience stores would not turn down my business given a choice, as I put on 90,000 km / year. Directly or indirectly, these business owners that I buy products and services from during my travel, help your local economy.

I'm a banker and not happy (and thus my borrower client is not happy) with the appraised value provided.

Any appraiser licensed in the province of Alberta, is first and foremost committed to 3 things, before anything else:

1. A code of ethics. If one cannot look themself in the mirror every morning and legitametly say they've done a good and accurate job, 100% of the time, on 100% of the files, it's time to change or leave the profession.

2. The standards as set out & published by the professional appraiser association the appraiser is a member of (there are 2 in Canada). aka: "the appraiser rule book".

3. The rules and regulations as published and documented by the Real Estate Council of Alberta (RECA). RECA has the full authority of the province of Alberta to regulate and discipline (where necessary) real estate agents, appraisers, mortgage brokers, and property managers. Discipline can mean tens of thousands of dollars in fines, or loss of license = no longer able to make a living. You, as a banker, are NOT regulated by RECA rules, and so it's understandable, that you may not always understand why appraisers are not able to do what you ask. But in the world of a limited supply of appraisers in the first place, (hard to enter the industry, and a lot of gray hair in the industry to begin with) it's in your best interest to have "more" appraisers and not less, especially as it relates to your expected turnaround times. If you are on the sales side of your organization, you may not like every appraised value, but as a fellow professional, hopefully you understand that we have professional and legal obligations to live up to, every day, on every file.

If you are a banker and reading this, please know this: The appraiser's job is to determine an "accurate" property value 100% of the time, on 100% of the files. Because of the above 3 points, there is no other option.

Due to the above 3 reasons, and for insurance reasons, if a banker believes a value change is warranted on a given appraisal, there is only 1 reason an appraiser may consider same: new comparable sales information on other properties, that the appraiser did not have before ( ie: a private sale, where there is full & complete info about the property that would have been readily available had it been listed on MLS with plenty of photos). If you can put new sales comparable information in front of an appraiser, that was not readily available before, (to anyone), the appraiser may be able to consider a value change.