The Appraisal Process

All of our appraisal reports are written in compliance with the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP). These standards regulate the appraisal methodology as well as the business practice and conduct of members of the Appraisal Institute of Canada. CUSPAP provides guidelines that ensure consumers receive only the highest quality service and reports.

While the finer details of the appraisal process can vary from appraiser to appraiser, and may depend on the scope of the assignment, the objective of a typical residential appraisal is to estimate the market value of the subject property as of the effective date of the appraisal.

There are a number of steps that the appraiser must take in establishing and justifying their opinion of market value for the subject property, including: inspection of the subject property; collecting and analyzing all relevant data; development of the direct comparison approach; and reconciliation of the appraisal data with a final estimate of value conclusion. These steps are outlined below.

Step 1 - Property Inspection

A thorough inspection is completed to identify and note any characteristics that may impact the property's value in the marketplace. The inspection takes into account many elements, including: physical characteristics of the dwelling; interior and exterior finishes and mechanical systems; quality and condition of the improvements and any upgrades; and any deficiencies or required repairs. The appraiser will collect this information during the inspection, taking photographs to provide a visual record of the data described in the report and may also take measurements to confirm the size of the dwelling. The appraiser also looks for any positive or negative neighbourhood influences that would affect the value of the property.

Step 2 - Data Collection and Analysis

The appraisal process includes collecting, analyzing and reporting a wide range of information about the subject property as well as the subject neighbourhood and surrounding area. This includes: neighbourhood market trends and area influences; services and utilities available to the subject property; zoning and land use regulations; legal description; tax assessment; site dimensions; age of the dwelling; property ownership; and sales/transfer history. Current real estate market data, comparable sales and listings are also gathered and analyzed as part of the Direct Comparison Approach.

Step 3 - Direct Comparison Approach

One of the key methods of valuing a residential property is the comparison of the subject property to other recent sales in the neighbouring area that offer similar characteristics. Since no two properties are exactly alike, the appraiser gathers information on any differences and applies adjustments to the comparable sale prices based on the estimated contributory value of these differences. The adjusted sale prices of the comparable sales then provide a reasonable range of value to guide the appraiser in estimating the market value of the subject property.

Step 4 - Reconciliation and Final Estimate of Value

Once the direct comparison process is complete, the appraiser will have a set of adjusted sale prices that provide a range of value for the subject property. To arrive at a final estimate of value, the appraiser reconciles this range by analyzing which sale or sales represent the most reliable comparable(s). Reconciliation is based on a variety of criteria, such as which sale is most similar to the subject (fewest adjustments), which sale has the most similar location or which sale was most recent. The estimated value of the subject property may be at either end of the adjusted value range, depending on which criteria are most relevant, but is often at the mid-point of the adjusted value range, if the available comparable sales are considered equally reliable.

For further information about the appraisal process, please see our our pages discussing Market Value Definition and Frequently Asked Questions.

For additional consumer information, resources and appraisal related publications, please visit The Newsroom or our Consumer Resources page. 

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