Appraisal for Mortgage

In BC, the lender typically orders the mortgage appraisal to confirm the property is adequate security for the loan, even though the cost is usually passed on to the borrower. The appraiser is engaged by or on behalf of the lender, so the report belongs to the lender, not the buyer. Borrowers should request a copy of the appraisal report from their lender, as they are not automatically entitled to receive it simply because they paid the fee.

When an appraisal value falls short of the purchase price, the lender will base the mortgage amount on the lower appraised value rather than the contract price. The borrower must cover the resulting gap in cash at closing, which can be a significant and unexpected expense. Buyers in BC are encouraged to include a subject-to-financing condition in their purchase contract to allow time to address such a shortfall before removing subjects.

Not always — insured high-ratio mortgages in BC (where the down payment is below a certain threshold) are frequently approved using an automated valuation model (AVM) rather than a physical appraisal, at the mortgage insurer's discretion. Mortgage default insurers such as CMHC, Sagen, or Canada Guaranty may accept an AVM when their risk assessment criteria are satisfied. A physical appraisal can still be required if the AVM result is inconclusive or the property type is unusual.

Lenders in BC typically require appraisers who hold the Accredited Appraiser Canadian Institute (AACI) designation from the Appraisal Institute of Canada, or who are designated as a Canadian Residential Appraiser (CRA) for residential properties. These designations signal that the appraiser has met national education, experience, and ethical standards. Borrowers or agents who have concerns about an appraiser's qualifications should consult the Appraisal Institute of Canada's member directory.

Property Transfer Tax (PTT) under BC's Property Transfer Tax Act is calculated on the fair market value of the property at the time of transfer, not the mortgage appraisal value or the purchase price alone. If an appraisal suggests a value different from the purchase price, the BC Ministry of Finance may use the fair market value when assessing PTT. PTT rates are currently 1% on the first portion of value, 2% on the next portion, 3% on the portion above a higher threshold, and an additional 2% on the residential portion exceeding $3,000,000; consult current BC Ministry of Finance guidance for exact tier boundaries.

No — under the Real Estate Services Act (RESA) and the standards of conduct enforced by the British Columbia Financial Services Authority (BCFSA), licensees are prohibited from engaging in conduct that is misleading, deceptive, or dishonest, which would include attempting to improperly influence an independent appraisal. A licensee who pressures, coaches, or provides selective information to an appraiser to inflate a value could face disciplinary action by the BCFSA. Licensees should provide factual, complete information when requested by an appraiser but must not advocate for a specific value outcome.

When appraising a strata lot, an AACI- or CRA-designated appraiser will consider both the individual unit and the overall financial health of the strata corporation, which is governed by the Strata Property Act (SBC 1998, c. 43). The appraiser may review the strata's depreciation report, contingency reserve fund balance, and any unresolved special levies, as these factors can materially affect market value and lender risk. A well-funded strata with a current depreciation report generally supports a stronger appraisal outcome.

Yes — ALR designation is a material factor that an appraiser must consider, because properties within the ALR are subject to land-use restrictions under the Agricultural Land Commission Act (SBC 2002, c. 36) administered by the Agricultural Land Commission (ALC). These restrictions can limit subdivision, non-farm use, and residential construction options, which directly affects market value and lender security. Lenders may apply more conservative lending criteria to ALR properties, and borrowers should ensure the appraiser is aware of any ALC applications or approvals affecting the land.

A mortgage appraisal is commissioned by the lender to protect the lender's security interest, not to serve as independent advice to the buyer. Buyers in BC who want an independent assessment of value for their own protection may separately engage a qualified appraiser under their own retainer, which creates a report owed to them rather than to the lender. Real estate licensees operating under the Real Estate Services Act (RESA) and regulated by the BCFSA have a duty to disclose this distinction to their clients.

Personal information collected during the mortgage appraisal process is subject to BC's Personal Information Protection Act (PIPA), which requires that personal information be collected, used, and disclosed only for purposes a reasonable person would consider appropriate in the circumstances. Lenders, appraisers, and brokers must limit sharing of a borrower's personal information to those with a legitimate need and must not use it for unrelated purposes without consent. Individuals who believe their personal information has been improperly shared may file a complaint with the Office of the Information and Privacy Commissioner for BC.