Valuation. Evaluation or appraisal? Which one should you be getting for your home or investment property? 

 Many buyers use the term evaluation, when what they really mean is “‘appraisal” or “valuation’’

 In this article we will help you distinguish the difference and understand how each is used, by who and when. Plus we will also break down the costs.


A property valuation is a formal process conducted by a suitably trained professional known as a valuer, certified, sworn or registered valuer. 

 It usually requires an in-person inspection of the property, but can also be conducted by desktop (known as a desktop valuation) or from the kerb (known as a driveby valuation). 

 The valuation document  is usually 3-5 pages long and provides a single figure to express the value of the property (Ie) $675,000. The document holds a lot of weight and is used in law proceedings and other significant and formal settings. 

 A Sworn valuation is also used for financing purposes, determining capital gains tax in the event an owner occupied home becomes an investment property (or vice versa) and for refinancing existing loans. 

 A valuation is also relied upon in legal matters; such as divorce or estate and tax matters. 



 The valuation is usually ordered by a bank, mortgage broker and in some cases a solicitor and will cost approximately  $400-$550. 

 When a valuation is ordered by a bank or mortgage broker it may be free of cost in some instances, or may be as little as $250 depending on the bank.  

 A real estate agent is not licensed, trained or permitted to provide a “valuation”. Only a sworn valuer can provide one. 



Buyers often mistake market appraisals for a “valuation” or “evaluation”.  

 Let’s look at the difference now. 

 A market appraisal is conducted by a licensed real estate agent. 

 It involves the real estate agent going to inspect the property for the purpose of providing the owner an indication of what the agent thinks the home would sell for.

 The appraisal is provided to the seller on the selling agent’s letterhead and is expressed as a price range (ie) $800,000 – $880,000. It is generally a one-page document or may also contain a generic print out of recent sales that have occurred in the immediate area. 

 This letter of appraisal will not be accepted by a bank or in a legal proceeding as evidence of the value of the home ( because these matters require a sworn property valuation conducted by an appropriately trained person, as discussed above). 

 An appraisal is purely to help the vendor understand what price range the home would likely sell for. 

 Sales agents are always happy to offer free market appraisals to owners. 



 Offering a free market appraisal allows selling agents to get their foot in the door and build rapport and trust with the homeowner who may eventually decide to sell and use the selling agents services.  

 It is important to understand that some agents will intentionally quote a lower price on the appraisal (because they want to set low expectations and then surprise the owner with a higher sales result if they sell) and some agents may place a higher price range on the property which may not be achievable. This is done by some agents to win business, and is known as “overquoting.” 



 The majority of homeowners and home buyers use the term evaluation. But what they really mean is “valuation” or  “market appraisal.” 

 This is simply because many people do not know what the correct terms are and confuse the word valuation and evaluation and also use them in the wrong context. 

 If you have used this term don’t feel embarrassed. It’s a very common mistake.

 Now you have read this blog post you will be using the correct terminology and sounding like a real estate pro.


In summary: 

 So to wrap things up, here’s what you need to know:

  • If you want to understand for your own purposes what your home or an investment property might sell for, ring a local real estate agent and ask for a free market appraisal.

  • If you want to know the value of a property for capital gains tax purposes, because you are splitting assets or handling an estate with multiple beneficiaries, (essentially anything formal that requires accuracy) you will need to contact a valuation firm and pay for a sworn valuation which will be conducted by a sworn valuer (also known as registered or certified valuer)
  • If you are refinancing a property, wanting to increase your loan amount or obtain a new loan, your bank will order a valuation and this may be free of charge (because the bank will cover the cost) or will be a small fee added to your loan costs or paid by you  upfront.


Share this article with your friends so they too can sound like a fancy real estate pro at their next family BBQ. 

 Now that I have pointed out the correct terminology and how to use it, I bet you will notice just how often the word evaluation is used.