New construction and renovation appraisers in Canada
A construction appraisal values a home that does not exist yet, or not in its finished form. The appraiser works from plans, specifications and a cost breakdown to give an “as complete” value, what the property will be worth once the work is done, and a lender uses that figure to size the construction mortgage.
The appraisers listed here do new construction, custom build and renovation appraisals, along with the progress inspections lenders require before each draw.
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Are you an appraiser? List here freeThe as complete appraisal
An as-complete appraisal assumes the work will be finished according to the plans and specifications provided. The appraiser values the lot, reviews the construction budget, and compares the finished home with sales of similar new or recently renovated homes nearby.
The value and the cost are separate questions. A custom build can cost more than the market will pay for it, an expensive finish in a neighbourhood that does not support it, and the lender lends against the value, not the budget. Finding that out at the appraisal stage is better than finding it out at the last draw.
Draw inspections on a construction loan
Construction mortgages release money in stages as the work progresses. Before each draw, an appraiser or inspector visits the site, estimates the percentage of work complete against the budget, and reports to the lender, which then advances funds accordingly.
The draw schedule, and how the percentages are measured, should be clear before the first shovel goes in. Borrowers run into trouble when their builder’s payment schedule gets ahead of the lender’s draw schedule, leaving a gap they have to fund themselves.
Renovation appraisal
A renovation appraisal gives two values: the property as it stands, and as it will be after the planned work. Lenders use it for purchase-plus-improvement mortgages and renovation refinances, where the extra borrowing is justified by the value the work adds.
Not every dollar spent comes back. Kitchens, bathrooms, added living space and legal suites usually add value; highly personal finishes and over-improvement for the street usually add less than they cost. The appraisal is where that is tested.
Common questions
How do you appraise a house that is not built yet?
From plans, specifications, a lot description and a construction budget. The appraiser values the finished home by comparing it with sales of similar completed homes, on the assumption that it will be built as described.
What is a draw inspection?
A site visit during construction, ordered by the lender, to confirm how much of the work is done before it releases the next advance. The inspector reports the percentage complete against the budget, not the quality of the workmanship.
Do renovations increase appraised value?
Often, but rarely dollar for dollar. Work that adds living space, updates kitchens or bathrooms, or creates a legal rental suite tends to add the most. Work that suits one owner’s taste, or pushes the home well above its neighbours, tends to add the least.
Why did my new build appraise below the construction cost?
Because market value and cost are different measures. If comparable homes in the area sell for less than it cost to build yours, the appraisal follows the market. Land value, the neighbourhood’s price ceiling and over-specified finishes are the usual reasons.