Home Appraisals vs Online Home Value Calculators

September 19, 2019/in D. Fritz Appraisals News/by D Fritz Appraisals

Home Appraisals and Online Home Value Estimates Are NOT the Same Thing

On-site vs. Online: Proper Home Appraisals Need to be Done in Person

With so many types of transactions solely being handled online these days, it’s tempting to want to complete your required home appraisals entirely online and leave it at that. Online home value estimates, however, are not a substitute for a house appraisal carried out by a licensed real estate appraiser.

Online home value estimators can sometimes come close to providing the right answers, but they will never completely beat out the accuracy of an on-site visit by a professional. Nothing can beat the human touch when it comes to home appraisals! The following blog post explores why this is.

What is a Home Appraisal?

A home or house appraisal is a third-party report written by a professional appraiser who visits the property and does market research to analyze how much the house is worth in today’s market. An appraisal report informs homeowners, home buyers, and mortgage lenders on the market value of the home.

What is an Online Home Value Estimator?

An online home value estimator is a website or online tool that gives you a rough idea of what your home is worth, based on things like its address, square footage, lot size, and age. There are several competing websites and online platforms and tools offering home value estimators or home value estimating services. Sometimes these online services are referred to more formally as Automated Valuation Models (AVMs), or more casually, home value calculators.

There are online home value estimation tools for homeowners, realtors, and also for banks. While there are free online tools available to homeowners, the Realtors Property Resource is only available to real estate agents. Furthermore, some B2B home valuation services require a subscription, making them suitable for financial institutions and other companies who have recently started providing home estimates to accompany their other financial services.

Each of these tools, however, are likely to provide slightly varying results making them difficult to rely on for any definitive answers.

There are websites that provide home value estimations just by searching an address, while others may provide an estimate only upon request. The most basic ones are featured front row centre on real estate agent and mortgage broker websites. They start by simply asking you “What is your home worth?” or invite you to “Find out how much your house is worth.”

To use the tool, you simply enter your address, and then a few other property details, such as the age and type of property you have, how many bedrooms and bathrooms, and how big the lot size is. Many of the tools ask you for your contact details or ask you to create an account so they can follow up with you. These free online calculators are essentially marketing tools but can provide a nice starting point for homeowners just starting to think about listing.

How Online Home Value Estimators Work

Online home value estimators provide estimated values for properties based on algorithms and calculations using different sets of property data, taken from MLS and BC Assessment, for example. They look for patterns and relationships between stored property values and the information you have input. These tools often look at past property tax records, what nearby homes have sold for recently, and the average price per square foot in the area.

Home value estimators are limited in what they can estimate, relying solely on the user’s answers to a handful of generic questions. They may or may not be able to calculate the desirability of the city the properties are located in. As such, they should not be considered as a substitute for formal home appraisals. This is because they are incapable of carrying out an up-to-the-minute comparative market analysis on your property, nor do they have intimate, in-depth knowledge of your local area like a local real estate appraiser would have.

Limitations of Home Value Estimators

Home value estimators can give you a rough estimate of what your home is worth, but they cannot account for things like:

unique features of a home
recent repairs or renovations
add-ons or upgrades
local markets
neighbourhood charm
nearby attractions and amenities
future amenities
quality of the views
how well-cared for the home is

In contrast, a licenced property appraisal professional looks at all of those things and more to deliver a thorough, trustworthy and confidential appraisal.

The Takeaway

As technologies get better and better and more data becomes available, the number of companies offering online home value estimates may grow. As it stands, although online home valuation calculators are not thorough or robust enough to replace a human appraiser, they are still commonly used to get both high and low ratio mortgages approved.

A good example of this is CMHC’s auto valuation tool called Emili. Described by the CMHC as “a groundbreaking on-line mortgage loan insurance [decision-making] system,” Emili is essentially a database of properties that uses different factors as way of determining what a house is worth.
Most of these online estimators will highlight the importance of meeting with a real estate professional or home appraiser to receive an in-depth, in-person appraisal of the property that factors in local markets.

A Homeowner’s Next Steps

If you require a general sense of how much your home is worth, an online home value estimator may be a good place to start as they are free and fast. Some realtors, financial institutions, and professional property appraisers do use sophisticated versions of them as a starting point before doing an on-site appraisal.

After you have checked your home’s value online, consider meeting with a real estate agent to see what they would list your house for. If the numbers are aligned, that’s a good thing! But if the numbers are wildly off, a professional home appraiser can help.

If you receive a home appraisal that is a lot different than the amount an online value home estimator provided you, do not be alarmed. It’s common for these numbers to be different, and when they are, we recommend trusting the person who looked at your property in person. Artificial Intelligence cannot yet beat human input when it comes to home appraisals!

Contact D. Fritz Appraisals today to book your next appraisal in Victoria, BC. We specialize in real estate appraisals for all situations, such as mortgage refinancing, new construction, division of assets, and estates.

Home Inspections vs Home Appraisals

August 12, 2019/in D. Fritz Appraisals News/by D Fritz Appraisals

What’s the Difference Between a Home Inspection and a Home Appraisal?

If you’re in the market for a new home, the terms “home appraisal” and “home inspection” are more than likely to come up at some point as you zero in on a property you want to buy. Upon acceptance of your offer, the next steps are usually:

home inspection – a voluntary third-party service ordered by the buyer, and
home appraisal – an often mandatory step the buyer’s lender insists on.

A home appraisal and a home inspection are two important steps in many real estate transactions, and for new buyers, there can sometimes be confusion over the two terms. An appraiser and a home inspector are two different service providers, who both happen to be looking at the house you are thinking of buying, but for different reasons. Understanding the differences between an appraisal and an inspection will help you understand when you might need one or the other – or both – before you buy your first home.

Let’s explore the similarities and differences between a home inspection and a home appraisal.

What Is a Home Appraisal?

Sometimes referred to as a property appraisal or a real estate appraisal, a home or house appraisal is a third-party report written by a professional appraiser that is meant to inform you and your mortgage lender on the monetary value of the property you are looking at buying.

Appraisals help make sure all parties in a real estate transaction get a current, accurate, and fair value for the property. In many cases, a mortgage lender assigns a home appraiser to go and view the property and generate a report. The appraiser confirms with the bank that the amount of money being loaned out is fitting, so the bank doesn’t lose in the case of foreclosure.

Like us here at D. Fritz Appraisals in Victoria BC, home appraisers check the overall condition of the home and compare it against the prices of recently sold and currently listed homes in the neighborhood to determine a value for the property. As professional appraisers, we also look at things like square footage, number of bedrooms and bathrooms, any obvious property damage, quality of the views, and the working order of major systems and structures as well.

Appraisers also factor in the neighbourhood, such as nearby school zones, local crime rates, the lot size, proximity to amenities, and any up and coming construction that might increase the value of the existing property.

Once our appraisal is complete, a report is generated. Real estate appraisal documents are legal, confidential documents that are only released to the original requestor of the appraisal report as well as other parties with the original requestor’s permission.

What Is a Home Inspection?

During a home inspection, a home inspector inspects the property to report on any issues that could spell trouble for the buyer down the road, such as a cracked foundation, leaking roof, mold and water damage, evidence of a pest infestation, building code violations, and poorly installed plumbing and electrical equipment, for example.

A house inspector does not report on how much they think a home is worth on the market in its current condition. While a home appraiser also looks at the home’s physical condition, the inspector delves a little deeper than an appraiser, peaking behind the walls and in the crawl space and attic, for instance, to report on any costly repairs that might be needed in the future.

What do home appraisals and inspections have in common?

Appraisals and inspections share many similarities. For example:

They are both provided by a third-party, non-biased, professional agency.
They both involve a professional visiting and analyzing the condition of the property.
They both happen prior to the sale of a home and are often both added as subjects on a contract.
They both result in detailed reports highlighting the property’s condition, functionality, and integrity.
They both benefit the buyer primarily during the closing of their desired property.
They both require the seller to give them permission to enter the premises.

Both services also give a buyer negotiating power. If a contract of purchase includes a subject of sale based on the results of a home inspection, for example, a buyer can back out of the deal or negotiate a better price. Likewise, in the case of an appraiser appraising the property for less than expected, the lender may not loan the necessary funding, and the buyer can go back to the seller with this information. If there was a subject to financing, the seller may choose to work with the buyer by lowering the price.

How are home appraisals and home inspections different?

Despite having many similarities, appraisals and inspections have some key differences:

An appraiser examines the home as well as the values of other properties that have recently been sold in the area. In contrast, an inspector only looks at the property in question.
A buyer typically orders a home inspection at their discretion, whereas a home appraisal is usually mandated by their lender (mortgage provider).
An appraiser determines the value of the real estate, whereas an inspector reports on the overall condition of the home.
A home inspector stays on site for longer than an appraiser, searching every nook and cranny. In contrast, an appraiser is doing a simple walkthrough and combining their findings with information they gather off-site.

Do You Need both an Appraisal and a Home Inspection?

As a buyer, booking a home inspection is entirely up to you. It’s not unlike having a used car checked out by an auto mechanic before you buy it. A home inspection can save you thousands of dollars in the long run. A home appraisal, on the other hand, is almost always required if you are looking to secure financing from a mortgage lender.

However, a property appraisal isn’t just for your lender’s peace of mind. It can also help you answer the question: Is the property really worth as much as the seller is saying it’s worth? Scheduling a home inspection on top of the home appraisal your lending institution will likely require you to get is often the most recommended course of action, especially if the property you are looking at is older, is no longer under a developer’s warranty, or is in a neighbourhood you are unfamiliar with.

Remember:

a home inspector cannot tell you what the home is worth. A home inspection report cannot be used to calculate a home’s value.
a home appraiser cannot speak to the level of repairs the home will need now or in the future. In other words, a highly appraised property value does not mean the property is in good shape underneath the finishings.

By ordering both processes, you get a complete picture of the property, without having to go solely on the word of the seller and their realtor. If you’re buying your first new home, we at D. Fritz Appraisals recommend both an inspection and an appraisal be done on the property for your total peace of mind before you buy.

To learn more about the appraisal process and what appraisers look for when we visit your property, contact D. Fritz Appraisals – your property appraisal experts in Victoria, BC, servicing Vancouver Island and the Gulf Islands.

landscaping improves the value of your home

8 Ways to Increase the Value of Your Home

March 7, 2019/in D. Fritz Appraisals News/by D Fritz Appraisals

Doing These Eight Things Will Help Increase Your Home’s Appraised Value

Looking for ways to increase the appraised value of your home? There are many things you can do to boost its overall value. The biggest things determining the value of your home are its location, its size, and the current market conditions. While these three factors are out of your control, there are still many things you can do to impress appraisers and list your house for top dollar.

Before you go spending thousands of dollars in renovations, however, make sure you follow this advice from the outset.

Create a Budget – Do your research and come up with a realistic budget and do your best to play within it. You need to be careful that what you spend on renovations is less than the potential increase in value of your house.
Keep Careful Records – Every trip to the hardware store adds up, so write everything down, keep receipts, and make note of any warranties you get. This information will help you impress the appraiser as well as prospective buyers.

Now that you’ve got the “bookkeeping” out of the way, here are 8 things you can do to increase the value of your home.

1. Consult pros along the way – Ask your real estate agent, your contractor, or even the owner of the paint store for advice along the way. It’s often free!
2. Book a Home Appraisal – Hiring an accredited appraiser at the beginning can help you understand what your home is worth in its current condition. It can also help you qualify for a home equity line of credit for larger projects.
3. Consider Your Neighbourhood – Check to see the listing prices of homes in your neighbourhood before getting too deep into a renovation. The neighbourhood will dictate the upper limits of what you can realistically expect to sell your house for. This ultimately affects how much money you should invest in improvements. For example, fancy fixtures might be over the top and quickly eat up the budget without adding any value to your listing price. You might not get back the cost of those $1,000 lighting fixtures. Likewise, a prospective buyer won’t be willing to overpay for your property just because it has a sauna.
4. Enhance Your Curb Appeal – A house that looks well taken care of from the outside can impress appraisers and prospective buyers alike. Enhancing your home’s curb appeal includes things like:
  Cleaning the roof: Get rid of that overgrown moss. For most houses, it’s not a charming look.
  Repairing the roof: Attend to roof repairs. A roof in poor condition will be flagged during a home inspection, allowing people to low ball or withdraw their offers.
  Fixing the fence: Fix your fence if it needs fixing but note that adding a fence where there wasn’t one there before might cost a lot without adding value.
  Power wash: A thorough power wash can quickly revive patios, driveways, and paths.
  Lawns: Keep the grass green and trim.
  Landscaping: Weed the garden, trim the hedges, and check with your municipality about removing hazardous looking trees.
5. Fix the Small Details – Inside, a lot of small fixes can add value. Things like leaking faucets, noisy bathroom fans, cracked windows, holes in the walls, burned out lightbulbs, carpet stains, and aging or outdated electrical fixtures can make your home seem like it needs a lot of work, thereby reducing its value. So, take care of these easy fixes.
6. Fresh Coat of Paint – A freshly painted house will clean and brighten everything up. Pick neutral colours, shop around for reliable painting companies, and be amazed at how quickly your value has increased.
7. Make It a Smart Home – Adding a few “smart” features to your home can add a touch of modern tech and appeal, without costing a lot. Consider installing Wi-Fi-enabled thermostats, doorbells and other gadgets to increase appeal.
8. Kitchens & Bathrooms – In many cases, a kitchen or bathroom reno can increase the value of your home. But proceed with caution because these types of projects can end up costing more money than what they add to your home’s selling price.

Every home is different. A kitchen renovation might make sense in one home, whereas in another house, adding a second bathroom instead of replacing the kitchen might make more sense.

Sometimes you can avoid going the whole nine yards and can get away with just swapping out the appliances and adding a fresh countertop. Make kitchen and bathroom renovation decisions wisely and consult an expert before you begin ripping out cupboards and bathtubs.

To learn more about the appraisal process and what appraisers look for when they visit your property, contact D. Fritz Appraisals – your Victoria, BC property appraisal experts servicing Vancouver Island and the Gulf Islands.