What is a home appraisal?

When a Calgary buyer obtains a mortgage, their lender needs to be confident the property is worth at least as much as the loan amount. That confidence comes from a professional appraisal — an independent, certified assessment of the property's market value.

What an appraisal determines

An appraiser's job is to determine the property's "market value" — the price a willing, knowledgeable buyer would pay a willing, knowledgeable seller in an arm's length transaction on the open market. The appraiser analyzes recent comparable sales in the area, the property's size, condition, location, age, and features, and the current state of the Calgary market to arrive at a point-in-time estimate of value.

Who orders the appraisal

In mortgage transactions, the lender orders the appraisal — not the buyer. The buyer typically pays the appraisal fee ($350–$600 in Calgary), but the appraisal report is the lender's property and may not be shared with the buyer automatically. In private sales or divorce proceedings, the parties may commission an independent appraisal directly.

When an appraisal comes in low

If the appraised value is below the purchase price, the lender will only lend based on the lower of the purchase price or the appraised value. This creates an "appraisal gap" — the buyer must either: bring additional down payment to cover the gap; renegotiate the purchase price with the seller; or, in rare cases, void the contract if the financing condition is still in place. In a rising Calgary market, appraisal gaps are uncommon but can occur when a property sells significantly above asking in a bidding war.

Types of appraisals

For standard residential mortgages in Canada, lenders typically use either a full appraisal (physical inspection of the property by the appraiser) or a desk appraisal/drive-by appraisal (relying on MLS data and comparable sales without an interior inspection). Full appraisals provide more confidence and are required for higher-value or unusual properties. CMHC-insured mortgages (less than 20% down) use automated valuation models for most properties.

Appraisal for estate and divorce purposes

Outside of mortgage contexts, appraisals are used in divorce proceedings (to establish FMV for equalization), estate administration (to establish FMV at date of death for tax purposes), and litigation. These appraisals are prepared on the instruction of a lawyer or accountant and follow the same standards but serve different purposes than lender appraisals.

Frequently asked questions

This page is for general information only and does not constitute legal or tax advice. Consult a qualified Alberta lawyer or accountant for advice specific to your situation.