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



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

Construction Loan

A construction loan is a short-term, interim financing option used to fund the building or major renovation of a property, with funds disbursed in. more

Certificate of Occupancy

A certificate of occupancy is an official document issued by a municipal authority confirming that a building complies with applicable codes and is. more

Bylaw Variance

A bylaw variance is official permission granted by a municipal authority allowing a property owner to deviate from local zoning or building bylaw. more

Absorption Rate

Absorption rate is a metric that measures the rate at which available properties are sold or leased in a specific market over a given period.. more

Corporate Restructuring

Corporate restructuring refers to the reorganization of a company’s operations, assets, or liabilities, often under court supervision, to improve. more

Consumer Proposal

A consumer proposal is a formal, legally binding agreement in Canada between an individual and their creditors to repay a portion of their debt over. more

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