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Imagine this: from scrubbing every corner of the house to pricing it right using the best house value calculator in Canada, you do everything to get top dollar when selling. And these tricks truly work; one homebuyer actually offers you your exact asking price or something higher. So, is the deal done?
Well, no, a high offer doesn’t necessarily mean that’s what you will end up selling for. Between offer acceptance and the final sale, the appraisal process stands in the way, which can wreck the deal.
The Appraisal Process Puts Sellers on Alert for Strong Reasons
If you weren’t already aware, an appraisal is a professional estimate of your home’s market value based on several factors. The buyer's lender usually requires this appraisal process to confirm that the house is worth what the buyer is paying. The lender approves the buyer’s loan amount only based on the appraisal result.
When the appraisal comes in higher than the price you and the buyer agreed on, that’s usually good news for the buyer and you (the seller). No, you will not automatically get that extra amount unless you renegotiate with the buyer. However, in this case, you can at least rest assured that the sale will proceed without any appraisal issues.
A low appraisal, on the other hand, can throw a wrench into your selling plans. Let’s say you agree to sell your home for $850,000, but the appraisal value comes in at $820,000. The buyer’s lender will only finance based on that $820,000 figure. So, the buyer will either have to cover the $30,000 gap out of pocket or renegotiate the sale price with you.
If the buyer can’t make up the difference and you are not willing to lower the price, the deal might fall through altogether. The bottom line is that the appraised value can influence the sale price, and also, whether the sale happens at all.
Factors That Can Work Against Your Home’s Appraised Value
Now you know that a low appraisal can delay your sale, lower your selling price, or cause the deal to fall through. So, as a homeowner, you must be prepared and understand what can hurt your home’s appraised value.
Here are the most common factors that might lead to a lower-than-expected appraisal -
1. Slow Housing Market
Appraisers look closely at current market trends when assigning a value to your property. If homes in your area are taking longer to sell or if prices have been trending downward, they factor that in.
Source - Housing Market Trends (The Canadian Home)
The average home price in the Greater Toronto Area (GTA) housing market has been falling compared to last year. Homes were also sitting on the market longer in December 2024 and January 2025, but the situation has improved slightly now. However, homes still aren't selling as quickly as they did last year.
The buyer or a home value estimator in Canada might not consider these latest market trends, but appraisers certainly will. Hence, price your home realistically based on the current real estate market trends.
2. Less-Than-Ideal Location
Appraisers consider the location carefully when assessing the value of a house. If your home is near noisy highways, industrial areas, or far from schools and shopping, it can negatively impact its appraised value. Even issues, such as poor street lighting, lack of sidewalks, or a high crime rate, can negatively affect the appraisal.
3. Poor First Impression
If your lawn is patchy, your paint is peeling, or your front steps are cracked and stained, it sets a negative tone for the entire appraisal. When appraisers see these signs of neglect outside, they may assume there are maintenance issues inside, too, which can impact your home’s value.
4. Poor Overall Condition
Signs of poor condition include stained ceilings, cracked walls, worn-out flooring, outdated fixtures, or broken appliances. Even minor things, such as chipped paint or dripping faucets, can raise red flags during the appraisal. Why? Because they suggest that the homeowner overlooked the ongoing maintenance, which means future costs for the buyer.
5. Outdated Kitchens and Bathrooms
You might love the charm of your original kitchen or the retro tiles in your bathroom. But to an appraiser, these outdated features can reduce the overall value of your home. After all, the kitchen and bathroom are two of the key areas buyers focus on. Even if everything functions well, any outdated finishes, old countertops, and worn cabinets can signal to the appraiser that the house needs improvement.
6. Renovations Without Permits
Made improvements to your home over the years? That’s great! But if you did the work without getting proper permits, it could hurt your home’s value when the appraiser shows up.
Appraisers typically check the legal status of renovations, such as finished basements, added bathrooms, garage conversions, or a new deck. If you completed your renovation work without permits, the professional may include it in the appraised value.
7. A Lack of Comparable Sales
Appraisers rely heavily on recent sales of similar homes in your area (comps) to determine your home’s market value. But if very few homes have sold nearby in the past few months, the appraiser has less data to work with. Without these strong comps, the appraiser might feel pressured to be conservative with your home valuation to stay on the safe side.
8. Poor Quality Additions
Adding space to your home can increase its value, but only if it is done right. Poorly designed or low-quality additions can actually hurt your home’s appraisal. For instance, if you have added an extra bedroom but used thin laminate in flooring, it could lower your home’s value.
9. Pest or Mould Problems
Few things can scare off appraisers and buyers faster than signs of pest infestations or mould. Whether it is termite damage, rodent droppings, or black spots on the walls from mould, appraisers will consider it in their final result.
10. Over-Improving Compared to the Neighbourhood
You may have added high-end finishes, luxury appliances, or custom design features to your home. But if your upgrades go far beyond what’s typical in your neighbourhood, your house could be considered “over-improved.” Buyers in your area may be unwilling to pay a premium for those upgrades. The appraiser may adjust the value downward as a result.
How Can You Keep Appraisal Issues from Hurting Your Home Sale?
While you can’t control the appraiser’s opinion, you can control several key factors that influence the outcome. You must start by setting a price that realistically matches your home's worth and market conditions. Next, improve your home's curb appeal and visible interior issues such as chipped paint, leaky faucets, or pest or mould problems. For outdated kitchens and bathrooms, if a complete update isn’t possible, focus on simple fixes. For any renovations, do it the right way by following permit rules and staying within local market expectations.
These steps can help improve your home’s appraisal outcome and keep your sale on track. To sum up, a clean, updated, and fairly priced home allows appraisers to see its true worth and encourages buyers to submit their best offers.