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What is an appraisal?

An appraisal is a formal, impartial estimate or opinion of value, usually written, of an adequately described property. The process of valuation, however, is more than a matter of referring to one or two sales in a given area and then calculating an opinion of value. An appraisal should be supported by the presentation and analysis of relevant data. In Canada, the real estate market is ever changing and valuation in today's market requires educated and experienced professionals. Canadian real estate appraisers are trained and experienced to recognize the factors that affect value. In estimating value, the appraisal professionals may use the Cost Approach, the Income Approach and the Direct Comparison Approach.

The Appraisal Institute of Canada, a national institute of professional appraisers, is dedicated to high and uniform standards for members. When considering an appraisal, choosing a member of the Appraisal Institute of Canada ensures compliancy with the Uniform Standards of Professional Practice of the Institute.

With respect to mortgage lenders, they will finance the property on the basis of whichever is lower—the appraised value or the sale price. Only a current dated appraisal is accepted for refinancing or a home line of credit.

Appraisal amounts usually differ from tax assessment values and usually tend to be much higher.