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Property Appraisals

Mortgage lenders seek guidance from The Appraisal Institute of Canada (AIC) for property appraisals. The AIC outlines various factors and guidelines for lenders to derive the value of property. Comparable sales in similar market conditions are used.


An appraisal is an important part of the mortgage approval process.

  • - It determines how much equity can be refinanced out of a property (up to 80%)
  • - It helps the lender determine if the purchase price of the home matches the market value (did the consumer over pay?)
  • - It provides the lender with market demographics for the home & surrounding neighborhoods
  • - It provides pictures of the interior to help show the condition of the home 


Comparable sales – deriving the value:

For all properties other than rural/cottages/recreational, dates of comparable sales: 

  • - 6 months - If appraisal indicates prices are stable or increasing
  • - 3 months - If appraisal indicates prices are declining 
  • - One comparable within 3 months and others within 6 months

Dates of comparable sales for rural/cottages/recreational 

  • - 12 months


How many comparable sales are needed?

  • - 3 comparable sales needed if the total net adjustments for all comparable sales are <25%
  • - 4 comparable sales needed if the total net adjustments for all comparable sales are >25%


What happens if they are not available?

  • - Appraisal must explain why
  • - Older comparable(s) may be used


What happens if they are readily available?

  • - A full appraisal may not be needed
  • - Auto-Valuation-Method will occur with no physical inspection needed


Appraisals in 2021

Many emerging areas are seeing new price benchmarks on every sale that occurs.

Due to multiple / bully offers, prices are exceeding list price & market value.

Lenders will provide financing on the LOWER of the purchase price or the appraised value. The consumer would then have to make up the difference in personal savings.

This possess additional risks for individuals who cannot make up the shortfall. 




- Purchase Price = 1,100,000 

- Appraised Value = 1,050,000

- Mortgage Financing = 80% x 1,050,000 = 840,000

*Clients would need to increase down payment from 220,000 (20%) up to 260,000 (23.64%)


Protecting Consumers

  • - Financial conditions that allow time for the appraiser to complete the report during the financing condition window. 
  • - Being confident in the comparable sales for the area (as the appraisers will likely use the same ones).
  • - Real estate professional to provide comparable sales to the mortgage broker & client so they can attach to the appraisal order form.


Home appraisal cost ranges from $100 to $150 for an Auto Valuation Method and $300+ for a full inspection. When a report is ordered for the lender, the report belongs to such lender, and the consumer does not receive a copy.


To order your own report, or for recommendations of real estate appraisers, residential appraisers, real estate appraiser Toronto, property appraiser, mortgage appraisal, please reach out to the Connolly Capital Team for assistance.








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