Unlocking the mysteries of home appraisal in the GTA is essential for anyone navigating the real estate market. Whether you’re a homeowner, a prospective buyer, or an investor, understanding the ins and outs of home appraisal can be the key to making informed decisions. This guide of GTA Home Network will explore everything you need about home appraisal in the GTA. From the factors that influence appraisal values to the importance of accurate assessments, we’ll equip you with the knowledge you need to navigate the world of property valuation confidently. Let’s dive in and uncover the crucial details of home appraisal in the GTA.
What Is A Home Appraisal?
A home appraisal is a critical process conducted by an unbiased and impartial professional to determine the value of a property. It is crucial in various real estate transactions, including home purchases and mortgage refinancing, benefiting all parties involved, from buyers and sellers to lenders. When purchasing a home, an appraisal ensures the selling price accurately reflects the property’s condition, location, and neighbourhood. On the other hand, during a refinance, a review helps lenders determine the maximum loan amount available.
Using the home as collateral, the lender can take possession or initiate foreclosure proceedings in case of borrower default. In both cases, the appraisal safeguards the lender, ensuring that the homeowner does not borrow more than the property’s worth. The lender faces significant risk and potential financial loss if the appraised value exceeds the borrowed amount. Therefore, a thorough appraisal is crucial to mitigate risks and protect all parties involved.
How Does a Home Appraisal Work?
A home appraisal plays a crucial role in securing a loan for a mortgage or down payment when purchasing a home. It is also required by financial institutions when refinancing a mortgage. Here’s a concise explanation of how the home appraisal process typically unfolds:
- Scheduling the appraisal:
The lender arranges for an assessment to determine the property’s fair market value, which helps determine the loan amount. The applicant usually bears the appraisal cost, and the appraiser must have no personal connections with the financial institution, buyer, seller, or homeowner.
- Property visit by the appraiser:
An appraiser visits the home to evaluate various factors such as its size, location, condition, and any additional elements that contribute to its value. This assessment aims to determine the house’s accurate, fair market value. The duration of the appraisal can range from 20 minutes to two hours, depending on the property’s complexity.
- Compilation of the appraisal report:
The appraiser prepares a comprehensive report detailing their findings during the property assessment. This report includes relevant data about comparable properties in the area, which helps support the assigned fair market value for the house.
- Loan approval or denial:
Based on the appraisal report, the lending institution decides whether to grant or deny the loan. The financial institution may reject the loan application if the house’s appraised value is lower than the selling price. However, the loan will likely be approved if the appraised value aligns with or exceeds the agreed-upon purchase price. If applicable, the lender creates a closing disclosure outlining the down payment, closing costs, and mortgage terms.
Tips to Get A Higher Appraised Value In GTA
Here are some tips to help you achieve a higher and more accurate appraisal value for your home in GTA:
- Deep Cleaning:
It is essential to address some basic cleaning tasks. If you have carpets, ensure they are deep cleaned. Polish marble floors and ensure the garage is tidy. The exterior of your home, including the front yard, porch, and back yard, should be well-maintained with regular cutting and mowing. In addition to general cleaning, if you have an ongoing project like a new pool being built, it’s advisable to cover it to present a more appealing appearance.
If you have undergone significant renovations in the past, such as a new kitchen or basement finish, it is essential to inform the appraiser. Provide relevant information regarding these upgrades’ timing, responsible parties, and costs.
- List of Features:
While the appraiser will note all the features in your home, creating a list highlighting all the amenities and advantages of your property’s surroundings can be helpful.
- Renovate Strategically:
If you plan to sell your home, consider renovating within reasonable limits. Renovating an entire kitchen or bathroom might not yield a favourable return on investment. However, small changes like carpet cleaning/replacement, improved lighting, or fresh paint can positively impact your appraisal without requiring substantial funds.
- The $500 Rule:
Appraisers often assign home values in increments of $500. Therefore, it is worth addressing any minor changes or fixes that can significantly influence the final deal. For example, even a minor issue like a leaky faucet or a cracked door could reduce your home value by $500, despite the repair cost being much lower, say, $300.
- Prepare an Empty House:
When the appraiser arrives to assess your home, ensure that no large family gatherings or get-togethers are taking place, as this can hinder their ability to perform the appraisal effectively. Remove pets from the premises during the appraisal process to create a more conducive environment for the appraiser’s work.
Sum Up
Following the tips above can increase your chances of obtaining a higher and more accurate appraisal value for your Greater Toronto Area (GTA) home. Taking steps to enhance your home’s curb appeal, addressing necessary repairs, maintaining cleanliness, highlighting upgrades and renovations, providing relevant data and documentation, emphasizing unique features, and promoting energy efficiency are all effective strategies. Additionally, being present during the appraisal and offering valuable insights can support a favourable appraisal outcome. To get more information, we are here on the GTA Home Network to help you.
Appraisals are indispensable in the GTA real estate market. When it comes to buying or selling a home, banks refuse to lend money if the appraised value falls short of the loan amount. However, appraisals can also prove beneficial in other situations, ensuring financial security and potential savings.
In the year 2023, the typical cost of a home appraisal in Canada ranges from $300 to $500, though it can differ based on the province. Notably, in regions like the Greater Toronto Area and other parts of Ontario, the cost of home appraisals tends to exceed the $500 mark. Regrettably, the selection of an appraiser rests with your lender, leaving you with limited control over the process.
