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Appraisal

Learn how appraisals work in Canadian real estate, why they’re essential for financing, and how they influence property value and mortgage terms.

Appraisal

May 22, 2025


What is an Appraisal?

An appraisal is an unbiased professional estimate of a property's market value, typically conducted by a certified appraiser during a real estate transaction or refinancing process.

Why Appraisals Matter in Real Estate

In Canadian real estate, appraisals help lenders determine whether a property's value supports the requested mortgage amount. Appraisals are often required for:
  • Mortgage approvals
  • Mortgage refinancing
  • Divorce settlements or estate planning
Appraisers evaluate factors such as:
  • Comparable recent sales
  • Location and neighbourhood trends
  • Property size, age, and condition
  • Renovations or upgrades

A lower-than-expected appraisal can affect financing, requiring a larger down payment or renegotiated price. Conversely, a high appraisal can help buyers secure better terms.

Understanding how appraisals work protects both buyers and lenders from overpaying or under-lending on a property.

Example of an Appraisal

A lender orders an appraisal for a $750,000 home. The appraiser values it at $725,000, and the buyer must increase their down payment to bridge the gap.

Key Takeaways

  • Determines property market value.
  • Required for financing and refinancing.
  • Conducted by licensed professionals.
  • Affects loan approval and terms.
  • Based on property and market data.

Related Terms

  • Market Value
  • Mortgage Approval
  • Comparable Sales
  • Real Estate Valuation
  • Home Inspection

Additional Terms

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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