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Home Appraisal in Canada: What to Expect, Costs and How to Challenge It

Updated

The lender orders an appraisal to confirm the property is worth what you’re paying, and a low appraisal can derail a purchase. Here’s how appraisals work, what to expect, and the options if one comes in low.

Why lenders require appraisals

The lender is using the property as collateral for your mortgage. They need to confirm that if you default, they can sell the property and recover their money. The appraisal protects the lender, not you — but it indirectly protects you from overpaying.

PurposeDetails
Confirm market valueEnsures the property is worth the purchase price
Calculate loan-to-value (LTV)Determines how much the lender will finance
Identify major issuesObvious structural defects, environmental problems
Satisfy insurance requirementsCMHC/insurer needs value confirmation for insured mortgages

What happens during an appraisal

StageDetailsDuration
Lender orders appraisalAfter your mortgage application and purchase agreement are submitted1–3 days
Appraiser visits propertyPhysical inspection of interior and exterior30–60 minutes
Comparable sales analysisAppraiser researches recent sales of similar propertiesPart of the report
Report completedWritten appraisal report submitted to the lender3–7 business days
Lender reviewsUnderwriter reviews the report and confirms value1–3 business days

What appraisers evaluate

Interior

FactorWhat They Look At
Square footageTotal living area (above-grade and below-grade)
LayoutNumber of bedrooms, bathrooms, functional layout
ConditionAge and condition of finishes, flooring, paint
Kitchen and bathroomsUpdated vs original, quality of materials
BasementFinished vs unfinished, height, walkout access
SystemsAge and condition of furnace, water heater, electrical panel
RenovationsQuality of work, whether permitted

Exterior and property

FactorWhat They Look At
Lot size and shapeRegular lot vs irregular, usable space
StructureFoundation, roof, siding condition
Garage/parkingAttached, detached, number of spaces
LandscapingGeneral condition and curb appeal
OutbuildingsSheds, pools, decks, accessory structures
AccessRoad access, private vs public road

Location and market

FactorWhat They Look At
NeighbourhoodQuality, amenities, schools, transit
Comparable salesSimilar properties sold in the last 6 months within the area
Market conditionsRising, stable, or declining market
ZoningConfirmed legal use
EnvironmentalProximity to highways, rail, industrial, flood zones

Appraisal cost

Property TypeTypical Cost
Standard residential (urban)$300–$500
Condo$250–$400
Rural property$500–$800
Waterfront property$500–$1,000
Luxury/high-value home$750–$1,500
Multi-unit residential$500–$1,000+

Appraisal vs home inspection

FactorAppraisalHome Inspection
PurposeDetermine market value (for the lender)Evaluate physical condition (for the buyer)
Who orders itLenderBuyer
Cost$300–$500$350–$600
Duration30–60 minutes2–4 hours
How thoroughSurface-level observationDetailed systems check
Checks behind wallsNoNo (but can recommend specialists)
Tests HVAC, plumbing, electricalNotes age/condition onlyTests function and identifies issues
Report focusDollar value and comparablesProperty condition and defects
Required for mortgageUsually (unless the lender uses an automated valuation)No

Most buyers get both: the appraisal checks the value for the lender, and the inspection checks the condition for you.

→ See: Home Inspection Guide Canada

What to do if the appraisal comes in low

A low appraisal means the property was appraised for less than the purchase price. This is a problem because the lender will only mortgage the appraised value.

Example

DetailValue
Purchase price$600,000
Appraised value$560,000
Mortgage (80% LTV)$448,000 (based on appraised value, not purchase price)
Your required down payment$152,000 (instead of $120,000)
Gap you need to cover$32,000 extra

Your options

OptionProsCons
Renegotiate the priceSaves cash; price reflects true valueSeller may refuse
Cover the gap with cashYou keep the dealRequires additional funds
Request a second appraisalMay get a higher valueCosts another $300–$500; not guaranteed
Submit a reconsideration of valueFree; provides new comparable dataAppraiser may not change their opinion
Walk away (if the financing condition isn’t met)Protects you from overpaying; deposit returned under a mutual releaseYou lose the property
Push back through your brokerBroker may have relationships with lender underwritersResults vary

How to submit a reconsideration of value

  1. Review the appraisal report: ask your broker or lender for a copy
  2. Identify errors — Wrong square footage, missing renovations, incorrect lot size
  3. Provide better comparables — Recent sales of truly similar properties that support a higher value
  4. Submit through your broker — They send the reconsideration package to the appraisal company
  5. Wait for review — Typically 3–5 business days

A reconsideration is more likely to change the value when it corrects a factual error or adds strong comparable sales the appraiser missed.

How to prepare your home for an appraisal (sellers and refinancers)

ActionImpact
Clean and declutterMakes spaces feel larger and better maintained
Complete minor repairsFix leaky faucets, patch drywall, replace burned-out lightbulbs
Provide a list of upgradesNew roof, furnace, kitchen — with dates and approximate costs
Ensure access to all areasBasement, attic, garage, crawl space
Provide recent comparable salesThe appraiser will research their own, but supporting data helps
Renovation spendingCosmetic updates help; major renovations may not return their full cost in value

When appraisals are not required

SituationWhy
Insured mortgage (under 20% down)CMHC or other insurer may use automated valuation models (AVM)
Mortgage renewal with same lenderLender already knows the property
Some refinancesIf LTV is low and the lender’s AVM confirms value
Low-ratio mortgage (under 65% LTV)Lower risk to lender; some waive the in-person appraisal

Even when a physical appraisal is waived, the lender still assesses property value — they just use automated data instead of an in-person visit.