What is a Home Appraisal?

An appraisal is a value analysis of a property by an independent, impartial and objective Appraiser hired by the lender during the home purchase or refinance process.  Since home lenders are funding the mortgage, it’s imperative that they understand the true value of the property.

Appraisers typically:

  • Verify legal descriptions of real estate properties in public records
  • Inspect new and existing properties, noting the characteristics of the home
  • Photograph the interior and exterior of properties
  • Analyze comparables or similar nearby properties
  • Prepare written reports on the property values
  • Prepare and maintain current data on each real estate property

Appraisers work in localities that they are familiar with so that they know any environmental or other concerns that may affect the property’s value.  Normally, the home buyer pays for the appraisal.

How does an Appraisal differ from a Home Inspection?

Home appraisals help determine the real value of the property whereas home inspections examine the actual condition of the home.  For more information on what systems we inspect, please refer to Our Services page.

Here is the key difference — an appraisal protects the lender from paying more than the house is worth and a home inspection protects the buyer by giving them a general, objective assessment of the house.

How we can assist Appraisers and Mortgage Lenders?

At Canadian Home Inspection Services, we often encounter Appraisers who require clarity on any given residential system/component as they may have encountered an issue with the property or they feel uncomfortable with the current situation.  They may require assistance in evaluating the condition of a septic system or a wood burning appliance.  Or perhaps they spotted a crack in the foundation.

Appraisers don’t carry the same in-depth knowledge and expertise as our home inspectors do.  Since they’re mainly responsible for providing a current market value of the property, they may not be looking at all components that are examined during a home inspection to determine the condition of the home.

Photo courtesy of superbrokers.ca

If a home inspector is asked to assist with the finalization of the Appraiser’s report, either the home buyer or the mortgage lender would usually pay for the information required.

The Bottom Line

Mortgage lenders lean on Appraisers to provide them with the actual value of the property they are financing.  However, should an Appraiser require additional clarity, from another expert, on a residential system that he/she is not knowledgeable about, it is common for the Appraiser to ask for the assistance of our home inspectors.