Top 5 reasons for needing a home appraisal

One of the most frequent questions we get is – why are home appraisals necessary? The fact is, there are a lot of times in your life when you might need an appraisal.

Here are our top five reasons:

 

#1 – Financing your home

From our experience, home financing is the most common reason for a home appraisal. The funny thing is, it isn’t even technically for you, it’s for your bank or financial institution. While it is possible to purchase a home with cash on hand, its pretty rare. The vast majority of Canadians purchase their properties with the help of a loan from a financial institution of private equity lender. When you apply for a secured loan such as a mortgage, or a home equity line of credit, you are putting the residence up as collateral for the loan. If for whatever reason you don’t pay back the loan, the lender can sell the home to get back the outstanding money they lent you.

In order to minimize their risk of lending you the money, your bank quite often will require a home appraisal. Getting the house appraised by a designated appraiser gives that bank confidence that the property is worth enough that it can be sold if they ever need to get back the money they lend you.

#2 – Selling your home

Selling your home is a big job with big stakes. For most people, their home is their single most valuable asset and selling your home can be a stressful time.

Deciding on the correct price to list your home for sale is crucial. List your home for too much and you can turn off potential buyers. Your house can sit on the market and start to raise red flags with potential buyers and real estate agents.  And you could end up with much less than if you had priced your home correctly from the start.

Price your home too low and you’ll probably be able to sell your home quickly, but you’ll likely be selling your home for less than you should have. Why leave money on the table?

An appraiser can’t help you with the marketing and selling your home. But they are an excellent way of obtaining an informed, independent assessment of the market value of your property.

#3 – Divorce Proceedings

Going through a separation and divorce can be a stressful and emotionally difficult time. Unfortunately the process is often also complicated by the division of assets. Whether it is agreed that you or your spouse will keep your home, or that you will sell it and divide the profits, everyone involved will have a keen interest in knowing the fair value of the property.

A home appraisal is often a required part of a divorce settlement and a home appraisal prepared by a qualified professional appraiser insures an accurate evaluation and a fair division of assets for both parties.

#4 – Relocation for Work

During your working career you may be required by your employer to move to another area of the country or even halfway around the world. In these cases you or your employer require the services of a real estate appraiser to determine the fair market value of your home.

The independent professional home appraisal lets both you and your employer rest assured that your home will be sold for a fair market value. You will be fairly compensated for having to sell your home and your employer will be able to sell your property in a reasonable amount of time.

#5 – Capital Gains and other Taxes

In Canada, when your sell your primary residence the proceeds are exempt from capital gains taxes. That exemption is only available for your primary residence, and is only applicable for the time that it was your primary residence.

If you sell your home and it has been your primary residence the entire time you have owned it, then the profits from the sale are tax exempt. If however the home was not your primary residence for the entire time you owned it, you will be required to pay capital gains on any increase in the value of the home that occured while it was not your primary residence.

A home appraisal by a professional real estate appraiser will be used to determine the value of the property when it ceased to be your primary residence and the gains over and above that will be taxable.

Carty Gwilym Real Estate Appraisal Services has been in business since 1989 and we’ve seen all these and many more reasons for an appraisal arise. Whatever your reason, we’re here to help you with your real estate appraisal needs.