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

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Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

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Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

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