What's the difference between a home valuation and a property appraisal? 

If you've begun the process of selling your home, you've likely already come across these two terms. While it's easy to get confused - because they are similar - there's a difference that sets these two terms miles apart in the eyes of the law. Put very simply, that difference is estimate vs. exact. Let's delve further into this difference:

A header image of home shaped figurines scattered across a wood surface with calculators.

Home Valuation

Home valuations are done by real estate professionals in order to estimate the value of a property. The method they use to do this is called a Comparative Market Analysis, also simply known as a CMA. A Realtor will examine previously sold properties with similar features in the area to create a report. This report helps sellers determine a realistic listing price for their home.  A typical CMA report will include: 

  • 3-5 comparable homes, including:

    • A structural description of each property (elevation, floor plan, number of bedrooms, number of bathrooms, etc)

    • The square footage of each property

    • The sale price of each

    • Dollar adjustments for any differences

    • The adjusted sold price per square foot of each property

  • The fair market value of your property based on these comparables

  • The neighbourhood's value to the seller's home
  • The style of the seller's home
  • The construction/build of the seller's home
  • The condition and age of the seller's home
  • The layout of the sellers home and its finishes
  • Any upgrades that have taken place in or on the seller's property
  • Nearby amenities to the seller's home

Property Appraisal

Property appraisals are done by unbiased professionals, appraisers, in order to determine the exact value of a property. Appraisers determine whether the home's contract price is appropriate given the home's condition, location, and features. In a refinance transaction, an appraisal assures the lender that it isn't lending the borrower more money than the home is worth. 

Similar to a comparative market analysis, a property's appraisal value is influenced by recent sales of similar properties, and by current market trends. The home's features, number of bedrooms and bathrooms, floor plan functionality, and square footage are also key factors in assessing the home's value. The appraiser must do a complete visual inspection of the interior and exterior, noting any conditions that adversely affect the property's value (such as needed repairs) in an official appraisal report.

This report will include:

  • A street map showing the appraised property and comparable sales used

  • An explanation of how the square footage was calculated

  • Photographs of the home’s front, back, and surrounding area

  • Front exterior photographs of each comparable property used

  • Other pertinent information such as market sales data, public land records, and public tax records.

Licensed real estate appraisers require special training and experience before they become full appraisers. Their methods for providing an appraisal go beyond using the sold prices of similar properties to arrive at an appropriate listing price. 



To sum it up, it's a seller’s agent that will perform a home valuation to decide on listing price - for marketing the home. A buyer's lender requires an independent appraisal on a property - for financing the home to a buyer. The lender wants to make sure the property is worth what the buyer is paying for it. That way, if the buyer were to default on the mortgage and the property were to go into foreclosure, the lender can recoup the money it has lent on the property.

Posted by Admin Staff on


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