A home appraisal is an independent, professional estimate of a property's current market value, conducted by a certified appraiser. In Ontario, mortgage lenders almost always require one before finalizing your loan to confirm the property is worth the amount they are lending.
The appraisal typically happens after your offer has been accepted but before your mortgage is fully approved. Your lender arranges for a certified appraiser to visit the property and assess it. The appraiser examines factors like the home's size, age, condition, layout, any renovations or upgrades, and the overall state of the local market. They also analyze recent sales of comparable properties in the area to arrive at a fair market value. For condos, the process tends to be more straightforward than for detached homes, which may involve evaluating garages, lot size, and other exterior features.
In Ontario, appraisers must hold a designation from the Appraisal Institute of Canada (AIC), typically a CRA (Canadian Residential Appraiser) or AACI (Accredited Appraiser Canadian Institute) credential. Their fee is not based on the value of the property. It is a flat fee determined by the complexity of the assignment.
The cost of a home appraisal in the Toronto area generally ranges from $350 to $500 for a standard residential property, though more complex or higher-value homes can push that figure higher. In many cases, the lender covers this cost as part of the mortgage package, particularly for conventional mortgages with 20 percent or more down. When the lender does not cover it, the buyer pays.
The question buyers worry about most is what happens if the appraisal comes in below the purchase price. In that scenario, the lender will only approve a mortgage based on the appraised value, not the price you offered. You would need to cover the difference out of pocket or renegotiate the purchase price with the seller. This is one reason a financing condition in your Agreement of Purchase and Sale provides critical protection. It gives you the ability to walk away if financing falls through due to a low appraisal. Learn more about how conditions protect buyers in our guide on What Is a Conditional Offer in Ontario Real Estate?
A home appraisal is not the same thing as a home inspection. An inspection evaluates the physical condition and structural integrity of a property, while an appraisal focuses strictly on market value.