Real estate bidding wars are becoming the new norm in several Canadian cities, particularly in Toronto and Vancouver, and can skew market values. Where properties will sell for hundreds of thousands of dollars above asking prices, homebuyers increase their risk of not being able to recover that investment when the same property is sold in the future.
Keith Lancastle, chief executive officer of the Appraisal Institute of Canada, says getting an appraisal can help buyers gain confidence in their purchasing decision.
"For many people, purchasing a home is a very emotional decision and may be one the largest investments they will make in their life. That is why it is important to have an objective and unbiased opinion of the value of the property from a designated appraiser to ensure you have all the information you need," says Mr. Lancastle.
"On-site appraisals are often required by lenders to ensure that buyers do not borrow an amount larger than a property's value," he adds. "If you overpaid by $150,000, you can't expect the lender to underwrite that emotion."
"It is important to remember that cost is not synonymous with value," Mr. Lancastle says.
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