Here are two ways to assess the value of a home
What’s the difference between a comparative market analysis and a home appraisal?
There are some very important differences between these types of valuation reports, but both can be useful tools to help you in the real estate market.
Whether you are actively searching for a home to buy, or are in the market to sell one, having a thorough understanding of the services available to you can make all the difference in your approach and help you hone the decisions you’ll make.
It is wise to equip yourself with as much information as possible before you begin searching for a real estate agent or brokerage to assist you with the purchase or sale of a property. Know which tools and insights an agent can provide to support your best interests and any special considerations you may have.
A comparative market analysis — also known as a market evaluation — serves a different purpose than an appraisal does. Both are valuation services that some agents or brokerages bring to the table, but be aware of the important differences between the two.
A comparative market analysis is a tool that real estate agents use to compare similar homes that are currently listed or have recently sold within a specified area. This is typically done to estimate the current approximate value of a home and helps the seller to set a competitive listing price for their property. It can also be used by buyers to anticipate what they might expect to pay for a home.
Specifically, the analysis compares a property to other homes that have recently sold in the area that are similar in size, construction, style, condition and features. This can give you a good sense of the neighbourhood and provide a baseline comparison of the properties within it.
Be mindful that just because two or more homes may be similar in size and have the same number of bedrooms and bathrooms, for example, that does not always mean you’re comparing apples to apples. For this reason, when reviewing a comparative analysis report, you may want to dig deeper into other key considerations and special features of the properties, such as how recent the renovations were, among many other factors.
A real estate appraisal, on the other hand, provides a quantitative approach to information and insights that are particular to the features and the condition of a specific home. Appraisers may also be real estate agents, but often are specialists who only perform appraisals.
Factors in an appraisal report, like the square footage of the build, its overall condition, the number of bedrooms and bathrooms, as well as features such as cosmetic upgrades, fireplaces or a pool, will provide a detailed assessment for financial lenders. They may also serve as an additional tool for many sellers and potential buyers to assess a property’s value.
It is important to note that an appraisal can only be prepared by a professional who is accredited to do so.
All the best to you on your next real estate transaction.
This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.