Understanding a home appraisal: steps, costs, tips

A home appraisal is a professional, unbiased estimate of a property's market value that is conducted by a certified appraiser. One thing to note is that an appraisal is not the same as a home inspection, which solely focuses on the structural integrity of the home. An appraisal, on the other hand, deals strictly with a dollar amount. This appraised value serves as a vital piece of information during any real estate transaction, as it aids lenders, buyers, and sellers in making informed financial decisions.

Home appraisals in 2025

Whether you're buying, selling, refinancing a loan, or settling a legal matter, home appraisals play a major role in determining the fair market value of the property. Canada's real estate market continues to fluctuate. With home prices declining by 3.9% year-over-year as of April 2025, understanding how home appraisals work is essential. What to expect from a home appraisal:

Informs you if your investment is sound

Real estate appraisals enable mortgage lenders to assess the risk associated with a mortgage loan to help confirm that the property is worth what the potential buyer is willing to pay. For home sellers, an accurate valuation of their property can verify that the listing price reflects the current real estate market. And finally, for home buyers, it offers peace of mind knowing they aren't overpaying.

Home appraisal costs

Given that each province or territory in Canada is diverse, appraisal costs can vary significantly. On average, the cost of an appraisal ranges between $300 and $500. In Toronto, these costs can be as high as $1,500 due to market demand, while costs across Ontario range from $300 to $1,000.

The home appraisal process: How it works

Once your mortgage has been conditionally approved by a mortgage lender, the lender will typically ask for further documents, including a real estate appraisal.

Then, a certified appraiser visits the property. During this visit, the licensed appraiser will evaluate its features, including square footage, upgrades, the area, and more, before comparing them to similar properties, also known as "comparable properties," that have recently been sold in the area. Once finished, the licensed appraiser will deliver a formal report outlining their valuation and supporting evidence.

Types of home appraisals

There are several types of appraisals used in Canada:

• Full appraisal: Involves a walk-through of the property, interior and exterior photos, measurements, and a detailed assessment.

• Drive-by appraisal: The appraiser does not enter the home but evaluates the curb appeal and uses available information to form the report.

• Desktop appraisal: Entirely remote, based on records, photos, MLS data, and other public records.

A home appraisal cost will vary based on the type acquired and its accuracy. In 2024, the Appraisal Institute of Canada updated its CUSPAP (Canadian Uniform Standards of Professional Appraisal Practice) to strengthen its requirements around ethical conduct and documentation. Ultimately, these updates have raised the standards for all current and future Canadian appraisers.

Why appraisal reports matter

Home appraisals are essential when it comes to mortgage financing, divorce settlements, the distribution of estates, and private sales. For mortgage lenders, it’s a way to manage their risk. For sellers, it provides a better idea of their asking price. And for buyers, it ensures they aren’t overpaying for a property. An accurate appraisal helps all parties make better financial decisions and keeps the real estate transaction based on real market data.

When and why a home appraisal report is required

Lenders usually require a home appraisal to approve a mortgage. This ensures that the loan amount is not greater than the property's market value, which in turn will protect the lender from the borrower defaulting on their mortgage loan. That said, home appraisals do more than check off requirements for the lender. Let's take a closer look at different scenarios that require appraisals below:

Mortgage approval

When you buy a home with a mortgage, your lender will want to make sure it's worth the money. If the home appraises below the agreed-upon purchase price, the lender may lower the approved loan amount or deny your mortgage entirely.

Mortgage renewal or mortgage refinancing

According to the 2024 CMHC Mortgage Consumer Survey, 62% of those polled were renewing their mortgages, which increased from 58% in 2023, while the percentage of first-time home buyers decreased compared to previous years.

When someone borrows a substantial sum of money, like through a high-ratio mortgage or refinancing, the lender may request a new appraisal. This is done to ensure that the home really is worth that amount, and that they are not loaning more money than what it is actually worth.

Separation and divorce

When separating shared wealth, a licensed appraisal can help both parties understand the fair market value of a property they own together. This makes negotiations and legal processes fairer.

Estate settlements

When someone passes away, the person in charge of their estate (known as the executor) usually needs to know the amount their property is worth. This helps determine how to divide assets equally among beneficiaries and whether taxes have to be paid.

Private sales or purchases

If you're buying or selling a house without any help from a real estate agent, an independent appraisal can provide an unbiased assessment of the home's true value.

Home equity lines of credit

Lenders often want an assessment when you apply for a Home Equity Line of Credit (HELOC). This allows them to determine how much your house is currently worth and how much equity you've built up over time, so they know how much money they can safely lend you.

How long does the home appraisal process take

Most appraisals are requested after an offer is accepted. Typically, the lender arranges for the appraisal and receives the report within 5 to 7 business days. However, turnaround times may vary depending on the local real estate market and demand for reports. In busy markets such as Toronto or Vancouver, delays may cause the closing date of the transaction to be pushed back. That said, it really depends.

Further, appraisals can also be used in advance. For example, a seller may order an appraisal before putting their home on the market to get a better idea of its true market value. This can help set more accurate listing prices and prevent more complicated negotiations later down the line.

Automated house appraisal vs. full appraisals

Some lenders, specifically online mortgage lenders, use what is known as Automated Valuation Models (AVMs). These tools function by utilizing algorithms and public records, social trends, and current economic conditions to generate a report, rather than physically visiting a property.

Although automated valuation models make the appraisal process quicker, they may miss certain features like renovations that an actual real estate appraiser would pick up on. This is exactly why a home appraisal report conducted by an actual home appraiser is essential in Canada's competitive and volatile real estate market.

How appraised values are calculated

Like we said, a licensed professional appraiser will use various factors when calculating the most accurate valuation of your home. Here's a closer look:

Design style orcurb appeal

You might be surprised to learn that the design style of a home can impact the appraised value. The decor itself, such as artwork or furniture, will not be evaluated. However, any permanent design choices will be made, such as flooring, countertops, or cabinetry.

Renovations made to the home

If the home has been renovated in any way, both major or minor, the improvements made will also impact the appraised value. Note that certain renovations will have a bigger influence on the value. For instance, renovated kitchens and bathrooms, professional landscaping, or a finished basement tend to have a larger return on investment than smaller updates like new flooring or windows.

Age and condition of the home and its utilities

The age and condition of the home directly relate to value, so these will also be assessed. Specifically, an appraiser will look at the roof, foundation, appliances, heating system, electrical system, and plumbing system.

Generally, newer homes are valued higher than older homes, but this isn’t always the case, such as if the home is located in a historic neighbourhood or has unique property features.

Location

Where your home is located also matters. A real estate appraiser is going to look at your property's proximity to amenities such as:

• Grocery stores

• Transportation hubs

• Community centres

• Schools

• Hospitals

• Fire and police stations

Beyond this, your property valuation is also determined by local crime rates and climate conditions. For example, is your home located in a flood or wildfire zone? How many property thefts are recorded in your neighbourhood annually? This information can significantly impact the appraised value of the home.

Comparable sales

Comparable homes are any type of similar property that's been sold in your neighbourhood. Comparable homes are the foundation of most appraisal reports. To be considered an acceptable comparison, the home must be similar in size, age, layout, and current condition. Ideally, if the home's been sold in the last 90 to 180 days, that's a bonus.

For example, if a similar house just sold for $720,000 and is almost identical to the one being assessed, real estate professionals will typically recommend listing yours for around the same price. However, adjustments can be made to account for any differences, such as an additional bathroom, a newer roof, or the lack of a garage.

Materials used to construct the home

Lastly, a home appraiser will take into account the materials used to construct your home when assessing its value. Higher-quality materials that are more durable may lead to a higher appraisal value. Further, environmentally sustainable materials can also increase a home’s value.

Why a home appraiser may provide a low appraisal amount

Some homeowners and sellers may be surprised when the value of the home receives a low appraisal from their appraiser, especially if recent upgrades to the property have been performed. There are numerous reasons for this, and it happens more often than you think. Here's why:

Volatility of economic conditions

Appraisers rely significantly on recent comparable sales. In an unstable real estate market like Canada's, these sales may no longer reflect the current listing pricing. If home values are declining, today's asking price could be higher than yesterday's numbers or vice versa.

Overpricing of homes in the area

Sellers often price homes based on their expectations rather than recent real estate data. Even if buyers are prepared to pay more, lenders are unlikely to approve a mortgage based on unreasonable expectations.

For example, if recent comparable homes sold for $680,000 and a seller markets their home at $740,000 without a specific explanation, the appraisal is likely going to be well below their asking price.

Exaggerated renovations

Not all home improvements increase a home's value by the same amount as they cost. For example, expensive materials like imported tiles may not increase the home's value by that much, especially if surrounding homes tend to be more standard. Appraisers look at what is typical for the surrounding area, not how much you paid to upgrade your home.

Poor property conditions

A lack of maintenance, structural concerns, and even cleanliness can affect the perceived value of your property. Appraisers consider outdated finishes, aging appliances, and other areas of issues when calculating their appraisal. Even crowded or messy interiors can have an impact on a person's impression of maintenance.

Incomplete or inaccurate comparable homes

In smaller communities, there may be fewer comparable homes and no recent sales, causing appraisers to use less-than-ideal comparisons in their calculations. This could lead to some issues, especially if surrounding sales do not reflect the true property value.

How to prepare for an upcoming appraisal

If you are a seller who recently listed your home and already have an interested buyer, you should start preparing for an upcoming home appraisal. Here's how you can maximize your estimated value:

Document renovations

Sometimes, not all repairs or renovations are obvious. For this reason, we suggest making a detailed list of any repairs or updates that have been made to the home since you owned it. We recommend gathering documentation to back up your notes, such as invoices from the contracting company and the dates that the improvements were completed.

Be flexible

Home appraisers have busy schedules, and chances are, you want this home sale to be completed as quickly as possible - just as the buyer does. Therefore, be flexible when it comes to the timing of the home appraisal. If the appraiser is only available one day of the week, do your best to make it work.

Given the appraiser space

Being home during the appraisal will make the entire process a lot easier. Though a large part of an appraiser’s job is to visually inspect the home, they are likely to have questions that only you, the homeowner, can answer.

For instance, they will probably ask about the condition of the property, what improvements have been made, and more. They may even have trouble locating something on your property, such as an HVAC unit. If you are home and available to provide them with the information they need, their assessment is likely to be faster, and they will leave more informed than they otherwise would have.

Clean your home

Before the appraiser arrives, make sure you clean your property and remove any obstacles. For instance, if a heavy piece of furniture is on top of the entrance to the crawlspace, which they may want to evaluate, move it out of the way. If you have a pet, enclose it in a certain area of the home. Beyond cleaning and decluttering, you may also want to make a few minor repairs, as the condition of your home and the amount of visible damage can decrease its appraised value.

Give your own comparable properties

If you have documents of recent sales from your neighbourhood, especially those that may not be listed on MLS or other real estate sites, there's no harm in compiling a list for when your appraiser visits your property. Bring along the following documents to improve your credibility:

• Property tax assessments

• Insurance claims records

• Floor plans or surveys

What happens after a detailed report is completed?

Once the appraised value of your home has been submitted, you're probably thinking, "what happens now?" Your home appraiser will submit a document that includes their calculation of your home's fair market value, photos, evidence, and more to your lender. What happens next depends on the results of the report. Let's look at the different scenarios below:

Scenario 1: If the appraised value meets or exceeds the purchase price

Let's say that the home appraisal meets or exceeds the purchase price of your home. In this case, the home sale is likely to be approved by your lender. Once they've finalized your loan amount, you can continue toward your closing process. In other words, no other requirements are needed from the buyer or the seller at this point.

Scenario 2: If the appraised value comes in lower

Now, let's say the home appraisal comes back lower than the purchase price. This is where things can get tricky. If this happens, your mortgage lender may reduce the amount of money they are willing to loan you by taking into account the actual fair market value of the home, rather than the agreed-upon price. So, where do you go from here? Don't stress, you do have some options:

• Make up the difference in cash: If you are financially able to, consider paying for the shortfall out of pocket.

• Head back to the negotiating table: If you aren't able to pay anything more out of pocket, consider heading back to the sellers and negotiating a new price. They may be willing to accept a lower amount based on the recent home appraisal.

• Challenge the home appraisal: Should you not agree with the fair market value presented in your home appraisal, you do have the option of challenging the decision with the appraiser or getting a second opinion.

• Walk away: If your offer included a clause for home appraisals, you may be able to walk away from the transaction without any penalties.

Note that if you plan on refinancing your home, a low appraisal may reduce the amount of equity you can borrow, which in turn can change your loan terms. So, remember to speak with your appraiser directly and your lender as well. They can help clarify any confusion you may have.

How to challenge a home appraisal cost of your property value

If you believe that your home appraisal has undervalued your home, you may have grounds to challenge it, especially if you notice any errors were made or that important data was missed. Here's what you need to do:

1. Review your report

The first thing you need to do is review the report presented to you by your appraiser for any issues. These may include:

• Outdated or incorrect square footage.

• Ignored upgrades or renovations.

• Wrong number of bedrooms or bathrooms.

• The use of non-comparable properties or poor use of properties in your area.

2. Provide comparable properties

In the event your real estate appraiser used poor comps, you will be able to submit new data and other listings of recent sales in your neighbourhood that you think better reflect your home. When searching online, specifically look for recent sales in your neighbourhood that closely match your property size, age, layout, and current condition.

3. Highlight unique home features

Make sure the appraiser considered unique home features you may have, such as a legal rental suite, energy-efficient appliances, custom finishes, and more that may increase your property value.

4. Request a reconsideration

Once you've collected your supporting documents, send a written request to your lender for a reconsideration of the appraisal. The lender may then ask the original appraiser to evaluate the file or get a second opinion on the matter before moving forward.

5. Consult a real estate agent

If you're unsure how to compare properties or gather data, a local real estate agent can help support your case. Just remember that even if you file for a reconsideration, it doesn't guarantee results.

Regional appraisal variations across Canada

As we previously mentioned, although appraisal processes are standardized across Canada, costs can vary widely across Canada depending on several factors local market conditions, property types, and the overall demand for appraisers throughout the year. Let's look at some provincial differences in more detail below:

• British Columbia: British Columbia has a hot real estate market, especially in downtown Vancouver. As of April 2025, the average home price in B.C. was $942,884. Despite high purchase prices, appraisal reports range from $395 to $595, which is considerably lower than other high-demand markets in Canada, like Toronto.

• Ontario: Ontario has a wide range of appraisal costs, which is largely due to how diverse the Greater Toronto Area is in terms of neighbourhoods. For example, the average provincial cost for a property appraisal ranges between $300 to over $1,000. In cities like Toronto, you can expect these prices to cost you around $1,500, whereas in smaller areas like Kingston or Brockville, they will be on the lower side.

• Alberta: Appraisals in Alberta generally fall between $350 and $500. In cities like Calgary and Edmonton, where suburban properties and some new developments are common, these reports tend to be straightforward. However, in more rural areas like Athabasca, Manning, and St. Paul, comparable homes can be hard to come by, which may increase costs.

• Atlantic Canada: In provinces like Nova Scotia or New Brunswick, appraisal fees are typically $300 to $450, staying within national averages. Again, it larger cities like Fredericton or Halifax, where recent sales are more common, these appraisals tend to fall on the lower cost range, while rural communities can expect slightly higher costs.

Home appraisal vs. home inspection

Both home appraisals and home inspections are common steps in the home-buying process. However, these terms can often be confused with one another, even though they serve different purposes. Here's what you need to know about home appraisals and inspections:

Home appraisal: The purpose of an appraisal is to assess a property's fair market value and is often requested by mortgage lenders before they approve applications. To determine the value of a home, the appraiser considers its size, location, condition, and similar sales in the area. This ensures that the lender does not lend more money than the home is actually worth. In other words, appraisals help lenders protect their financial interests.

Home inspection: In contrast, an inspection provides a report on the current condition of the home. It is usually requested by the buyer and involves a qualified home inspector thoroughly inspecting the home's building, electrical and plumbing systems, safety features, which include the roof, foundation, and HVAC, and more. The purpose is to identify any problems or repairs that are required before making the final purchase. We’ll break down the key differences:

Key differences

• Who it’s for: Appraisals protect the lender's interests, while home inspections protect the buyer's interests.

• What it evaluates: Appraisals focus on the fair market value of the home, while inspections focus on the home's current conditions.

• Is it mandatory?: Appraisals are required for most mortgages before approvals are made, while inspections are optional, but still highly recommended.

Is a home appraisal the same as market value?

Not, really. A home appraisal estimates market value using data presented by the appraiser. Market value, on the other hand, can be influenced by buyer demand, negotiations, and more.

How long is an appraisal valid for?

Home appraisals in Canada are typically accepted for 60 to 90 days, depending on the loan provider and current market trends.

Who pays for the appraisal report?

Most of the time, the home buyer is responsible for paying the appraiser fee when applying for a mortgage or refinancing.

Can I be there when the home is being appraised?

Yes, both the seller and the buyer can be present for the appraisal. However, you aren't allowed to influence the report in any way. You can, however, answer any questions the appraiser may have.

Contact BrokerLink to learn more

Home appraisals are an essential component in the home-buying process and are meant to protect the interests of your lender before accepting your loan. If you still have questions about home appraisals in Canada, contact BrokerLink. As a full-service insurance brokerage with expertise in home insurance, we can answer any questions or concerns you may have, including how your appraisal can impact your home insurance costs.

And when you're ready, we can help you acquire the following coverage for your home and help you save money on your premiums by qualifying you for discounts like bundling your auto and home insurance with the same provider, a home alarm system discount, and more.

Get a home insurance quote

Home appraisal FAQs

What happens if the appraised value of a property is different than what I hoped?

If you are a seller, then it’s possible that the appraised value of your home will be lower than your listing price, which could present several issues. Similarly, if you are a buyer and the appraised value is lower than the purchase price, this could also spell trouble, especially if your mortgage loan is dependent on the appraised value. In such a scenario, the seller should be prepared to negotiate with a potential buyer, as the buyer will likely want to change the terms of the deal to suit the lower price. For instance, the seller may be forced to accept a lower purchase price or agree to accept certain contingencies that they were previously unprepared to accept.

What should I expect after the home inspection portion of the home appraisal is complete?

After the appraiser leaves your home, they will draft an appraisal report with their findings. The report will include not only the results of their on-site inspection, but also other relevant information like market trends, comparable properties, location research, public land records, and more. The amount of time it takes for the appraiser to draft, finalize, and deliver the report varies, and could take as little as a few days or as long as a few weeks. If they don’t offer one, you can ask your appraiser for an estimated timeline when they leave your home.

How long is a home appraisal?

The home inspection portion of a home appraisal can last anywhere from 30 minutes to two hours. It depends on the size of the home, the number of amenities, the company you hire, and more. However, the entire home appraisal process will likely take over a week, or more depending on the availability of the professional who is appraising your home.

What factors increase the appraised value of a home?

Location is one of the biggest factors used to determine a home’s value. Having a home in a desirable neighbourhood is critical if you want the value of your home to be high. A desirable neighbourhood is typically one with good public transit, quality schools, a low crime rate, and lots of amenities, like grocery stores, shopping centres, restaurants, etc.

Beyond the location of one’s home, which is difficult to have any influence over, making small repairs or home renovations prior to the appraisal can also increase its value. For example, if you have an unfinished basement, you could try to finish it before the appraiser visits. Alternatively, renovating an old bedroom, adding an ensuite bathroom, or updating your kitchen countertops could also add value to your property.

What hurts the appraised value of a home the most?

Just as a good location can increase the appraised value of a home, a bad location can significantly decrease the appraised value of a home. A bad location typically translates to a neighbourhood with a high crime rate, limited access to public transit, or a home located near a highway or railway. Further, a home in old or poor condition, especially if major features like the roof, foundation, plumbing system, electrical system, or heating system are in bad condition, can have a significant impact on the appraised value.

What should a seller do to get ready for a home appraisal?

While a seller is not required to do anything to prepare their home for a home appraisal, it is recommended that they clean the home, conduct any cheap and minor repairs, make a list and gather any relevant records of completed renovations made to the home, and remove all obstacles inside and outside the home so that the appraiser can easily make their way around.

If you have any questions, contact one of our local branches.