How does one go about getting a reliable opinion of the current value of their real estate? This question is not as complex as you may think.
Generally, you can ask a realtor. Realtors will do what is called a competitive market analysis, usually at no charge. We realtors do this on the expectation that it will result in business for us, sometime in the future. A competent analysis involves a physical tour of the property, and a discussion with the homeowner regarding how much time is available to sell the property. The time to sell is important because selling a property in 30 days or less is quite different than if the seller has 90 to 180 days, which is the more typical time it takes to sell a property these days.
After the property has been viewed and the realtor has interviewed the seller, it is time to begin the analysis. Firstly, your realtor will seek out the sales that have occurred within the most recent 90 days. They will analyze the sales on properties which are as similar as possible to yours. All facets of comparison need to be addressed. For example, square footage, location, views, extra features or the lack of, and condition are the basics that need to be compared.
Also, if the market is rising or falling the sold prices would need to be adjusted accordingly. Once the applicable sold properties have been isolated, the realtor normally studies the current competition in much the same way. After all, the value of the subject property could not likely be considered to be above the asking price of similar properties which are currently listed.
Next question: “Do you need to seek multiple opinions of value?” The answer is “sometimes.” If you believe your realtor has been very thorough in the analysis and that they are well experienced, and you are confident there are recent sales in your type of property for the realtor to use to compare, then you can normally feel confident the opinion they put forth is reliable. Otherwise, by all means get multiple opinions. Bear in mind pricing is not an exact science and the courts require even certified appraisers to be accurate only within five per cent of current market value. I would like to express a word of caution here. Please, never choose a realtor based on their evaluation being the highest. That could easily take you down an undesirable path. You always want to choose a realtor for their competence and how comfortable you will feel working with them.
If you are looking at your tax assessment and thinking you can rely on it, please do not do so. I would like to strongly suggest you get a realtor evaluation or a certified appraisal as a superior alternative. There are some solid reasons why I say this. Firstly, the odds are that the assessor has not been inside your home and may not have even driven by.
Please bear in mind, assessors have a monstrous task of keeping up on the evaluation of hundreds of properties. At best, they can only reasonably attempt a general opinion of value.
Another catch with assessments is that they are done the year before. They cannot be any more current than October of the previous year. The cut-off has to be that far ahead, so that the assessment opinions are prepared and mailed out to homeowners in January. This is so there is time for the property owners to initiate the appeal process if they take issue with the tax value shown on their assessment. The bottom line is that assessments are not nearly current enough to use to establish present market value.
The last question I would like to address is, “Do you need a certified appraisal?” The answer again is “sometimes. If you are in any kind of legal process or entanglement, get a certified appraisal. These are the only evaluations that will stand up in a court setting. There are even different levels of expertise a court will recognize. There are extra accreditations the courts look to for opinions of value on unusual properties such as native land claims and high end properties etc. etc.
If you are trying to settle situations like an estate or if you are going through a divorce, seek out the certified appraiser. There are several such appraisal firms in most cities. To find a good Appraiser, ask your realtor.
If you are putting your property up for sale, it is never a bad idea to get a certified appraisal.
It is a quality second opinion to combine with your realtors’ evaluation. The cost for most certified residential appraisals is currently about $300 to $400.
This is a well priced service for what the appraisers do.
Jane Field is a realtor of over 35 years, affiliated with RE/MAX Vernon. To suggest topics for future articles email Jane@vernonrealestate.ca.