Have you ever had a feeling that the price of a property is too high? That you feel your home is worth more than what a Realtor says? That you and the buyer or seller cannot agree on price?
One of the tools I use is hiring an appraiser or two.
I went on a listing presentation a month ago and the price the seller wanted for her house ( she was told by her friends, neighbours, her dentist, even her niece who was a Realtor in the GTA what her house was worth) and the price I thought it would sell for was considerably less.
After going through all the discussions and neighbourhood values, she still did not want to list her house at my number but really wanted me to be her Realtor.
I said ok, but we would put 6 names of local appraiser’s names in a hat, she would reach in and pull out 2, and get two appraisals. We then would add the two, divide by two and that would be the range we would list her house for.
I even agreed to pay for the two appraisals.
Both appraisals were within a few thousand dollars of my price but considerably lower than the price her well meaning but misinformed circle of influence advised her.
We listed the house and it sold for my original price I thought it would sell for! A hero? Not necessarily but functional and practical.
I also used the same tactic between a buyer and a seller of a commercial property who were miles apart in price. We actually used 3 appraisals and add those up and divided by three!
So, in ending, there are many ways to consummate a sale and see the article below, it may help as well.
The following article was written by the Appraisal Institute of Canada (AIC) and will validate what I believe can be another solution to help buyers and sellers of real estate in London Ontario.
Real estate bidding wars are now the new norm in the over-heated Toronto and Vancouver property markets. Sales can end up hundreds of thousands of dollars above asking prices.
It’s a bonanza for sellers, with head-spinning multiple offers giving them a tidy sum of extra cash. For buyers, the process of finding a home is frenzied and emotional. If you are the REALTOR® caught in the middle, you may need an unbiased independent opinion to ensure that all involved have the information and research they need to make the best decision possible.
Market volatility is a concern for the Appraisal Institute of Canada (AIC) which is why the organization is encouraging REALTORS® to engage professional appraisers to get unbiased, independent opinions of property values to help them advise their clients.
“The more information you have in your hand, the better off you’re going to be,” says Keith Lancastle, chief executive officer of AIC, a self-regulating organization that has more than 5,000 members across Canada with Accredited Appraiser Canadian Institute (AACI) and Canadian Residential Appraiser (CRA) designations. “It’s prudent to help your clients make one of the most important investments in their lifetime with both eyes open.”
AIC members perform approximately 1 million residential appraisals in Canada of properties worth a total of more than $500 billion, and this amount is increasing every year. The majority of residential appraisals are completed for lenders for the purpose of mortgage financing. The lender wants to ensure the value of the collateral and that the Loan–to-Value ratio meets their guidelines. Mr. Lancastle says. “If your client buys a piece of property that is higher than the appraised value, it is important to remember that the lender will not underwrite the loan on that emotion.”
Dan Brewer, AACI, P.App president of AIC and a senior appraiser at Appraisers Canada Inc. in booming York Region north of Toronto, says that under guidelines set out by the Office of the Superintendent of Financial Institutions, on-site appraisals are required to ensure that buyers do not borrow an amount larger than a property’s value.
“You can’t finance your dreams,” Mr. Brewer comments, noting that much of the escalation in homes price in Toronto and Vancouver comes from a lack of inventory, time pressures and the fact that buyers and sellers are often “making decisions without knowing all the facts.” Bidding wars skew market values, and those who pay “out of whack” prices should be prepared to “pull a lot of money out of their jeans” and to consider whether they can recover that amount if they sell, he notes. “Cost is not synonymous with value.”
AIC-designated appraisers undertake comprehensive curriculum, experience and examination requirements and are experts in estimating the value of a property; real estate agents are experts in selling and purchasing property and home inspectors determine a property’s structural integrity, Mr. Brewer explains. An appraisal report helps property owners better understand a market’s sales and listing history, the exposure time to sell a property, supply and demand for similar properties, structural characteristics, assessment data, title restrictions, zoning and land-use controls.
“You’re interpreting the marketplace,” says Mr. Brewer, noting that qualified appraisers “are an integral part of the process,” helping homeowners do everything from understanding their equity positions to evaluating the value of particular upgrades they opt for. “We quantify those things, we monitor them, we measure them, we give guidance and direction.”
Mr. Lancastle says that in a larger sense, appraisals ensure that there are true values in the marketplace. “We are protecting everyone involved in the real estate transaction including the REALTOR®, the financial system and Canadian consumers.” He adds that AIC members also do appraisals for purposes such as estate planning, property tax assessments, mortgage refinancing and to help homeowners plan for and follow up after renovations.