Seller Resources - Articles

Selling Your Home - Appraisals, Assessments & Market Analysis

What is the difference between Market Analysis and Appraised Value?

The appraised value of a house is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $300 to $400. Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker. Either an appraisal or a comparative market analysis is the most accurate way to determine what your home is worth.

What's a house worth?

A home is ultimately worth what someone will pay for it. Everything else is an estimate of value. To determine a property's value, most people turn to either an appraisal or a comparative market analysis. An appraisal is a certified appraiser's estimate of the value of a home at a given point in time. Appraisers consider square footage, construction quality, design, floor plan, neighborhood and availability of transportation, shopping and schools. Appraisers also take lot size, topography, view and landscaping into account. A comparative market analysis is a real estate broker's or agents informal estimate of a home's market value, based on current sales of comparable homes in a neighborhood. Local Realtor's often have intimate knowledge of certain neighbourhoods and are actively working with buyers looking for homes. They will often place value on certain attributes that they know will be appealing to buyers at a particular given time.

What Does Assessed Value have to do with Market Value?

There are several things to consider when determining the pricing of your home for sale. The most common benchmark people use is the Assessed Value. This is the value used by local governments to determine your property taxes. However, this is not a reliable standard of measurement for pricing your property for sale. A quick survey of recent sales and their relation to assessed values will tell you that. In past years, we have found it useful to know 'the general relationship' between market value and assessed value. For example, when we would do a Current Market Analysis for a client, prices tended to fall between 110% and 120% of assessed value on average. However, since mid-2008 there seems to be a shift. Instead, properties are priced on either side of assessed value, some just below, some at assessed value, some just over assessed value, and some way above assessed value. There seems to be no clear relationship between sale price and assessed value these days. It's all over the map.

How Do You Figure Out the Market Value of Your House?

One way to determine the list price of your home is to get a realtor to do a Current Market Analysis (CMA) for you. This will usually include a range of comparable properties to yours, usually within your neighbourhood. However, if you have a particularly unique property, they may need to search a broader area to find those comparable properties. Also, if there has been little activity in your area, they may need to go further back in time than just the past few weeks or months.  Some realtors will do a CMA in a written report format, while others will simply pull a selection of comparable properties together and go through them with you.

A professional appraiser spends all their time appraising properties, they are paid for the work they do, and their reports are often seen (by buyers) as less biased. A real estate agent will do 'an estimate'. An appraiser will do a Professional Appraisal.

Most buyers don't care much about what anybody else thinks the house is worth. They care what they think it is worth. And if the home is in a state of disrepair or needs substantial renovations, they may see things quite differently.  You only need one Buyer, so given a sufficient length of time on the market with sufficient exposure, the market value of the home is ultimately determined by what a buyer is willing to pay for the home, in a price range acceptable to the seller.

Different Types of Appraisals

It is important to note that there are two kinds of professional appraisals. There is the marketing appraisal, such as the one mentioned above. And there is the financing appraisal, which is done so the bank is satisfied the house is 'roughly worth' what the buyer and seller have agreed it's worth. This means that when the appraiser goes in to evaluate a house for a financing appraisal, they are working for the bank ensuring that the price you paid for the home is in line with what they consider fair market value. This is for the banks protection, so that if you default on your Mortgage and the bank needs to foreclose, they feel comfortable they can get their money back when they sell it to recover their funds. As they are just ensuring their investment, we  rarely see a financing appraisal value differ significantly from the sale price. Don't be surprised if, when buying a home, you find your financing appraisal comes within $2,000 of the sale price. It is not a good standard of measurement for whether or not you 'got a great deal'.

Finally, please seek legal advice if you are ever approached by somebody wanting to purchase your home in a private sale. There are instances, one of which we know of personally where an elderly lady sold her property well below market value in private sale, when someone knocked on her door to ask if she was interested in selling. You deserve to get as much as you possibly can for your home, based on the current market conditions.


Kim Robbins & Gord Karpinsky
Kim Robbins & Gord Karpinsky
102-2748 Lougheed Hwy Port Coquitlam BC V3B 6P2