The deal with appraisals
I had a client recently ask, "What percentage of the time does a bank do an appraisal before lending?" The answer is really, "100 percent of the time," but what varies is the type of appraisal the bank will do.
There are three types of appraisals: automated, drive-by or on-site.
Cecilia Gatchalian, mortgage consultant, Verico Pacific North Mortgages, says, "For a conventional mortgage, most banks will use the automated property appraisal/valuation to assess the value of the property." She adds that a bank may also require either an on-site or a drive by (not to be confused with the more feared hail-of-bullets drive by!). When the mortgage is not going to be conventional--i.e., it's a high-ratio mortgage--then the insurer such as CMHC, will do the automated valuation.
Gatchalian mentions that rental properties as well as those not on MLS will require full appraisals in addition to those properties that are unique. The cost of the appraisal is usually taken care of by the mortgage broker.
Even though an ordered on-site or drive-by appraisal may seem like just an added step in the process of buying a home, it is a necessary one that gives everyone another assessment of the property. And that just helps everyone sleep a little better!