Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.
Issue link: http://digital.canadawide.com/i/254794
BY JANICE P. O'BRIEN appraisals MortgageBroker mbabc.ca winter 2014 | 29 DESIGNATED MEMBERS of the Appraisal Institute of Canada (AIC) and accredited Canadian Registered Appraisers (CRA) can provide independent and unbiased assessments of the value of homes – and property owners can save time and money by consulting one of these professionals prior to buying, renovating or refi nancing. Appraisals may be required for any type of property whenever real estate is sold, mortgaged, assessed, insured, or developed. How to hire the right appraiser Ask an appraiser for their professional designation and ensure it is from a strong professional association such as the Appraisal Institute of Canada. (Search online at aicanada.ca to fi nd an appraiser in your area). When you contact the appraiser, ask whether they have signifi cant experience in the type of valuation services you require and don't be afraid to ask for references. By hiring an AIC designated appraiser: • You retain a qualifi ed professional who has successfully completed the AIC's edu- cation, fi eld experience and examination requirements; • You engage a professional who adheres to the AIC Code of Ethics and Canadian Standards of Professional Appraisal Practice; • You will receive an independent and unbiased opinion of value supported by comprehensive market research and analyses. The assignment e terms of reference of the appraisal assignment should be in writing and agreed to by the parties prior to the assignment to avoid any misunderstanding or additional work to amend the valuation report. e typical terms and conditions that should be taken into consideration when hiring a designated appraiser include: purpose; intended use; intended users of the report; appraiser client; type of appraisal report; eff ective date; assumptions made; appraisal fee; confl ict of interest; due date; appraiser's certifi cation. Who's involved? Whether buying or refi nancing a home it is important for the consumer to understand where the appraisal report falls within the overall mortgage loan process. ere are many parties involved and each plays a critical role within the transaction. ese include: • Realtor or seller; • Lawyer; • Institutions regulated by the federal government (such as banks, Canadian and foreign), trust companies, loan companies and insurance companies; • Lending institutions that are non-federally regulated (e.g. credit unions); • Appraisal Management Companies ( AMCs); • Property Inspector – specialized contractors with expertise in uncovering defects in various types of properties. Appraiser Traditionally, the appraiser had a direct relationship with lenders, brokers and mortgage insurers however, since the mid- 1990s the lending industry has increasingly relied on computer-generated mortgage approval processes. Under certain conditions, obtaining an onsite appraisal of the property process is bypassed and a mortgage application may not necessarily involve an actual appraisal of or an onsite visit to the property by a qualifi ed and designated appraiser. e AIC recommends completing a comprehensive real estate appraisal by a qualifi ed appraiser to ensure that fi nancing is completed with an accurate and current estimate of the properties market value. Property inspection An inspection is just one of the many tasks performed by an appraiser. e appraiser's inspection takes into account a number of key elements including: • e physical characteristics of the dwelling and any outbuilding(s); • Interior and exterior fi nishes and systems such as heating and cooling; • e quality of any improvements; • Any defi ciencies or required repairs. In addition to understanding the dynamics of the real estate market in the area, designated appraisers also have construction skills and knowledge, which are fundamental to their training. Members also rely on the expertise of industry professionals where building characteristics are more complex. Whether it is the consumer or the lending institution that engages an appraiser to value the home, the appraiser will: • Plan on 20 to 40 minutes or more for the inspection, depending on the size and characteristics of the property; • Collect as much information as possible during the inspection of the home on the interior and exterior of the property; • Take photographs to provide a visual representation of the data in the report; • Take exterior photos to clearly identify the property and its characteristics. Appraisals & Mortgages Many professionals and institutions play critical roles in the residential appraisal process p28-31_Appraisals.indd 29 14-01-27 11:43 AM