Home appraisals and Current Market Assessments (CMA) are extremely important for those who are looking to buy and/or sell real estate. Home appraisals are more important if you are looking to buy a home, while the latter is of importance to sellers. As a new homebuyer, you want to be sure that you are not going to be overpaying for a home. In this article, we will explore what a home appraisal is, why it is important, as well as touch on some of the similarities between home appraisals and CMAs.

What is a home appraisal?

Buying a new home is a multi-step process. Even once you get a mortgage approval and put in an offer on your dream home, you still aren’t quite done.

Before that mortgage can go through, the home needs to be appraised. Home appraisals are an estimate of the market value of the home, based on a given point in time. A professional real estate appraiser evaluates the property during the start of mortgage discussions. Home appraisals take place after your purchase has been accepted, but before the mortgage is finalized. Home appraisals are important because the bank or mortgage lender wants to ensure that the property you want is worth the amount you are asking from them. The main reason for the appraisal is to justify what you, the buyer, is agreeing to pay for the property you want. Home appraisals usually cost anywhere from $300 to $500.

Role of home appraisals in real estate

Before your mortgage can go through, the home needs to be appraised. Real estate appraisers are professionally trained and unbiased towards the sale. They are not affiliated with any particular parties involved and are concerned with determining a true and accurate figure.

There are many ways that a home’s appraised value is used:

  1. In real estate transactions, it helps buyers and sellers determine how much the home should sell for.
  2. For financial institutions, it can help determine how viable a mortgage loan is by knowing how much collateral a home represents on a loan and making sure a borrower is not overpaying for a mortgage they are entering into.
  3. Banks will also want to know your home’s appraised value for the purpose of mortgage refinancing.

Factors considered during a home appraisal

According to the Municipal Property Assessment Corporation (MPAC), there are a lot of details, both interior and exterior, that home appraisers look for when performing an appraisal. Here are some of the things that they look for and take into account:

Interior (amenities):

  • Foundations type.
  • Square footage: Basement, deck, porch and garage.
  • Number of bedrooms.
  • Number of bathrooms.
  • Updates vs. remodels for kitchen and baths.
  • Whether the basement is full or partial.
  • Crawl space and/or attic.
  • Materials used on walls, floors, and windows.
  • Appliances and amenities.
  • Quality of construction.

There are 17 full and half-quality classifications in a home appraisal. They range from Class 1, which is the lowest, to a Class 10, which describes the highest degree of quality. Half classes are used when primary or main structures meet the standards of one quality class with some of the standards of a higher level.


  • Neighbourhood.
  • Lot size.
  • Type of driveway and car storage.

On top of these factors, the appraiser will also consider:

  • Location: A neighbourhood with schools, recreation options, and shopping will be very popular with families and will help increase the home’s value.
  • Age of the home.
  • Amenities in the area: Schools, recreation options, shopping, etc.
  • Comparable properties: If similar homes are selling for more than the appraiser expects, they may choose to adjust the price they have appraised accordingly.
  • Trends in the real estate market: If a home exists in a strong buyer’s market, an appraiser may opt for a lower value to reflect that.

For a more in-depth look at all the factors that are considered during a property appraisal, please click here.

As a seller, it’s possible to get an appraisal done before selling your home to determine a suitable list price. Many will simply opt for a CMA instead, as agents and brokers usually offer this for free.

What to do if you disagree with a home appraisal

Occasionally, after the home appraisal is complete, the appraisal value may not seem agreeable to the buyer, owner, or seller of the property. If your appraiser fails to take into account any number of different factors, this can result in a home being above or below what may seem reasonable. So, what should you do?

Mistakes can happen, and it’s worth speaking with your real estate appraiser to point out any factors you feel they may have missed. It may help them decide to reassess their figure. However, your appraiser knows best and may still remain firm on their estimate. Another option is to decide to work with a different appraiser. Appraisers are meant to be unbiased. Explain to them your disagreement with a previous appraiser, but be mindful that they won’t simply give you a higher number if you ask. Another possibility might be that the next appraiser may have an assessment that is even more off the mark than your initial appraisal. This is a risk you should be aware of at the outset.

When do you need an appraisal?

Essentially, if you are buying a home with a mortgage, your bank is putting down a significant amount of money to allow you to do so. Part of their due diligence process when approving a mortgage is to verify the value of the home before you buy it. In this case, it may occur to you to organize an appraisal. However, your lender will often take care of this process and even cover the costs. If the appraisal value is equal to or greater than the contract price, the lender will proceed with the mortgage without issue. But if your lender finds the appraisal to be too far below the contract price, they may need to reassess the mortgage.

If your appraisal is below the contract price, use the lower appraisal as a tool to negotiate a lower price. If this does not work, however, you may need to cover the difference in price yourself.

What is a Current Market Assessment (CMA)?

A Current Market Assessment (CMA) is a similar, but distinctly different, process from a house appraisal. It is usually the first step in listing a home with a real estate agent. A CMA is a method to determine a home’s fair market value through an analysis of recently-sold comparable homes. A CMA is not an official appraisal, as it is not conducted by an appraiser. Real estate agents and brokers usually provide a CMA and a comparative market analysis to potential clients. While they can provide this complimentary service, you can also do your own basic current market assessment if you are willing to do some research. A Comparative Market Assessment compiles the final sale prices for comparable homes sold in your area.

Ideally, you want to be looking at homes that:

  • Are within five to six kilometres of your current home
  • Have sold recently
  • Are a similar size (square footage/square meters, etc.)
  • Have similar features (e.g. close to the same number of bedrooms and bathrooms)

Home appraisal vs. CMA

A CMA is similar to a home appraisal in that it can give you some context into how much a seller’s property might be worth. It’s based off of using a similar set of criteria to determine your home’s fair market value. A current market value is meant to help you gain an idea of how much you should list your house for. This is a subjective estimate of your home’s value and what a buyer might be willing to pay for it. It’s not legally or financially binding, therefore, it should carry less weight than an appraisal.

Final thoughts on home appraisals

If you are going to buy or sell a home, you will likely need to get a home appraisal at some point. Home appraisals are a highly important tool in the real estate market and are beneficial to almost all parties. Appraisals ensure that everyone agrees on the value of a given property. Be sure to check that the appraiser is properly licensed. The result can have a huge impact on how much your home sells for and the amount of financing you may need to secure to purchase. Knowing how home appraisals work can help your real estate transaction go quickly and easily and for the best price.

If you are looking at purchasing your first home, you probably want more information about protecting your new investment. How can you do this? With the right home insurance policy. Purchasing home insurance doesn’t need to be complicated. For answers to home insurance questions, contact one of our isure representatives today. We will be more than happy to go through your many coverage options to ensure you get the right coverage possible for your investment.

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