For a real estate loan the appraisal does one job: it tells the lender what the property would bring in a sale within a reasonable marketing period. The loan amount is a percentage of that number, so understanding how it is produced saves surprises.
Who prepares it
We order appraisals from members of the Appraisal Institute of Canada holding the AACI designation, with experience in the asset type and the local market. The appraiser is engaged by the lender, not the borrower, so the report is independent. A borrower’s existing appraisal can be useful context but is usually not relied upon unless it is recent and can be transferred to us.
Which value we use
- Market value as-is: what the property is worth today, the basis for most loans
- As-complete value: for construction and renovation loans, the value when the work is done
- Liquidation or forced-sale value: a lower figure some lenders use for distressed situations
Why the number may disappoint
Owners anchor on purchase price, assessed value or what a neighbour sold for. The appraiser anchors on comparable sales, income capitalization for leased property and replacement cost. Vacancy, deferred maintenance, environmental issues and a thin market for specialized buildings all pull the number down. If the appraisal comes in low, the honest options are a smaller loan, more equity, or additional collateral, not a different appraiser.
Have a situation like this? Tell us about the deal and a principal will respond within two business days. Cascade lends to businesses only, in Canadian dollars, and every rate we quote is an annual rate.
