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A real estate appraisal is simply an estimate of market value.  An appraisal generally includes an inspection of the property and completion of a report in accordance to national standards. Typically, a market value estimate involves the comparison of the property under appraisal to other similar properties that have sold recently. “It requires continuous research to stay on top of a complex and ever changing market,” states Peter, “Buying, selling and financing property is becoming more complicated.”

The smart buyer or seller realizes the importance of obtaining a professional and independent opinion of value by a member of the Appraisal Institute of Canada. When people are selling they need the most informed and unbiased recommendations for listing and sale purposes. When people are buying a property, they need to ensure the value and quality is present. Clients may also require an appraisal for a mortgage, fire insurance, accounting, settling an estate, determining fair market rental, or for any number of other reasons. “Our fees are set on an hourly rate,” says Peter, “We don’t earn commissions”.

There are normally three traditional approaches to value, a cost approach, an income approach and a direct comparison approach. A value may be estimated from one or more of these approaches as deemed appropriate and then reconciled into a final indication of value.

The cost approach considers the value of the land, as if vacant, plus the depreciated cost of the building improvements.

The direct comparison approach involves the comparison of the property under appraisal to other, similar properties, which have sold recently.

The income approach assumes income is earned at market rates and the income stream derived is the subject of valuation.

Anyone interested in gaining more information about an appraisal of the Appraisal Insitute of Canada, you may go to http://www.aicanada.ca