What is an Appraisal?

A real estate appraisal is a calculation of the value of a home. A real estate appraisal can be done through a few different methods and for a few reasons, but the goal is to determine how much a piece of real property is worth.

Real Estate Agent Explains Appraisals

Just as real estate can be used for different things – like personal use, recreation, investing – real estate appraisals are done for many reasons: placing insurance, mortgage verification, home equity lines of credit and investment value (possible future value). However, because all of these methods are done through a mathematical calculation, they cannot necessarily pinpoint the exact value of a property at a particular time. There are so many variables to consider, that only by selling a property on the open market can anyone know its true market value.

Real estate agents may do a market evaluation which is much like an appraisal – but it is not an appraisal. An appraisal is done by an appraiser only. All real estate appraisers must be licensed in the province of Alberta.

Why Does It Matter?

Appraisals are very important to make sure investments are sound, fraud is prevented and owners and lenders are protected. For example, every time a new mortgage is placed on a property, the lender will have an appraisal done to make sure the value of the property is reasonable. If the appraiser’s findings do not mesh with the purchase price, the lender may not lend the funds to the buyer and the transaction could collapse.

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About the Author

Alan F Macdonald

Alan F Macdonald is a real estate agent with Realty Executives Challenge in Edmonton, Alberta.

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Appraisal