What brokers need to know about an ever-evolving appraisal process
That story includes neighbourhood context, physical improvements, and market activity – all of which feed into the final opinion of value. Polito also pointed out that lender requirements vary considerably, and brokers should factor this into their preparation.
“Brokers are asked to know their client and we’re asking them to know their lender as well,” he said. “A Big Five bank may have one requirement. A private lending individual may have a different requirement. Even within the same space, there are different requirements.”
Polito’s main advice for brokers is on client preparation, an area he said too many brokers overlook until problems arise. His recommendation: get ahead of potential issues by asking the right questions early.
“Rather than having the appraiser highlight potential areas of concern, have the broker be made aware of that first,” he said. “Do you have a basement apartment? Is it registered? Is it approved by the municipality? Do you have an addition? Was it done with or without permits? These are questions the appraiser will ask – better we know up front.”
What’s changed in the current market
In the current climate, expectation management on value is equally important – especially because of the significant drop in values across many markets since the peak of 2021 and 2022. The borrowers who purchased at the height of the market sometimes carry expectations that no longer reflect reality, according to Polito.
