Appraisal vs. Realtor Opinion of Value
| Feature | Appraisal Report | Realtor Opinion of Value (OV) |
|---|---|---|
| Purpose | Provides an unbiased estimate of fair market value for a lender or legal proceeding. | Informs pricing strategy for selling a property. May be influenced by market conditions. |
| Certification | Completed by a licensed or certified appraiser. | Can be prepared by a licensed realtor, but doesn’t require specific certification. |
| Detail & Research | In-depth analysis of property characteristics, comparable sales, market trends, and public records. Generally utilises sold listings and not currently advertised “for sale” prices. | Less detailed analysis, may focus on recent sales data and current market conditions. |
| Documentation | Formal report with detailed explanations, property photos, and comparable property data. | Typically a one or two-page document with a brief justification for the value estimate. |
| Cost | Typically ranges from $800 and upward depending on complexity. Factors that influence the complexity of the report include residential or commercial property, assist with litigation, tax matters, divorce, family buyout, etc,. | May be offered as a free service by a realtor you’re planning to work with. |
| Focus | Fair market value – the most probable price a property could bring in an open market. | Market value – the price a property could potentially sell for. |
| Legal Weight | Considered a credible and objective assessment by lenders, courts, and other institutions. | Not considered a substitute for a formal appraisal and may not be accepted for legal purposes. |
Example:
Let’s say you’re considering selling a 3-bedroom, 2-bathroom bungalow in a suburban neighbourhood.
- Appraisal: After a thorough inspection and analysis, the appraiser determines the fair market value to be $350,000. The report details comparable properties that recently sold for similar prices, along with adjustments made for size, condition, and upgrades.
- Realtor Opinion of Value (OV): The realtor you consult may recommend listing the property at $375,000. Their OV considers the current market trend of rising prices and potential bidding wars. However, they’ll likely suggest being flexible based on market feedback and appraisal outcome.
In conclusion:
An appraisal provides a neutral and defensible assessment of a property’s value, while a realtor’s OV is a more strategic estimate used for pricing a property competitively. Both can be valuable tools, but for legal or lending purposes, a formal appraisal is the preferred choice.
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Have a great day!
Sincerely
Shawn O’Connor, AACI, Hon. B. Comm,
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