Posted on: 5 February 2015
You should only pay for the value of a house; paying more than that and you are getting ripped off. That's why an appraisal is such an important step in the home buying process.
Dipping into the housing market
After you have been pre-qualified for a loan from a bank or other lender, you take to the housing market with an agent to see the available homes. Canada's economy is such that buying a house in the near future is a good idea. Cities like Toronto, Calgary, and Vancouver all are experiencing dips in the housing market, which is a good sign for house hunters. With interest rates low, Canadians should make every effort to get into a house soon.
But finding a dream house is only part of the actual home buying process. Once you find a house you like, you need to get it appraised.
Understanding the appraisal process
Depending on your lender who is going to fork over the mortgage loan, they will either set you up with an appraiser or expect you to get one separately. Whatever you do, you want to be sure this is a person you can trust. After all, if he or she is honest with you, it can mean gaining a stronger understanding of the home you're considering buying.
The appraiser like one from Accumark Appraisals Ltd. looks at the house in question and compares it with recent market house sales in the nearby area. The appraiser uses this information to confirm if the seller's asking price on the house is high or low, depending on the local market. Appraisers should compare the home to homes of similar style and size in the same city or county. For instance, it wouldn't make much sense for an appraiser to look at your Cape Cod-style home in Calgary to rapper Drake's mansion in Toronto.
Of course, many appraisers are only contractually obligated to look at the house itself, while paying little attention to the direct neighborhood. If that's the case, you might not be aware that the house is situated within boundaries to excellent schools, close to parks, and in a quiet part of a comfortable neighborhood.
Negotiating the final house cost
Many appraisals that come back can then be used to negotiate the actual asking price with the seller. If the seller is adamant about the price, give him or her a deadline. If the seller doesn't decide to lower the price by then, you will be free to remove your bid on the home and continue your housing search elsewhere.Share