Then the call comes:
“The appraisal came in low.”
And just like that — your Ontario real estate deal is at risk of collapsing.
In 2026, low appraisals are one of the biggest reasons purchases and refinances are falling apart at the last minute.
Here’s why it’s happening — and what most people don’t understand.
What Does “Appraisal Came in Low” Actually Mean?
An appraisal determines the lender’s opinion of your property’s market value.
If you agreed to buy or refinance at $1,000,000
But the appraisal comes in at $925,000
The bank will lend based on $925,000 — not your purchase price.
That creates a financing gap.
And that gap kills deals.
Why Low Appraisals Are Increasing in Ontario (2026)
1️⃣ Slower Comparable Sales
Appraisers rely on recent comparable sales.
In softer or adjusting markets, comps may reflect:
• Slight price declines
• Longer days on market
• More negotiation
• Increased inventory
Organizations like Canada Mortgage and Housing Corporation (CMHC) have highlighted slower segments and caution in certain urban condo markets.
Appraisers reflect that caution.
2️⃣ Conservative Lending Environment
Banks operate under capital and risk guidelines influenced by the Office of the Superintendent of Financial Institutions (OSFI).
In uncertain markets, lenders:
• Scrutinize valuations more heavily
• Request appraisal reviews
• Use automated valuation models (AVMs)
• Reduce high-LTV exposure
The result?
Values trend conservative.
3️⃣ Condo Sensitivity in the GTA
Toronto and surrounding GTA markets are seeing:
• High inventory
• Investor resale pressure
• Rental adjustments
• Slower absorption
When multiple similar units are listed, appraisers often choose the lowest reasonable comparables.
That compresses value.
How a Low Appraisal Collapses a Purchase
Let’s say:
Purchase price: $900,000
Appraised value: $860,000
Bank lending at 80% LTV
The bank will lend 80% of $860,000 — not $900,000.
That forces the buyer to:
• Increase down payment
• Renegotiate price
• Walk away
If the buyer can’t bridge the gap, the deal dies.
How a Low Appraisal Kills a Refinance
Refinance example:
Home expected value: $1,100,000
Appraisal returns: $1,000,000
Existing mortgage: $750,000
If you were planning to refinance at 80% LTV:
You expected access to $880,000.
But now 80% of $1,000,000 = $800,000.
Your equity room just shrank by $80,000.
If you needed that for consolidation or tax obligations — your strategy collapses.
The Hidden Factor: Timing
Most appraisal issues surface:
• 5–10 days before closing
• After financing conditions removed
• When deposits are at risk
That’s why they feel catastrophic.
There’s no margin left.
What Are Your Options When an Appraisal Comes in Low?
1️⃣ Challenge the Appraisal
Provide stronger comparable sales. Sometimes lenders will reconsider.
2️⃣ Renegotiate Purchase Price
In adjusting markets, sellers may understand.
3️⃣ Increase Down Payment
Not always possible — but sometimes necessary.
4️⃣ Explore Equity-Based Private Lending
Private lenders often assess:
✔ Property value independently
✔ Marketability
✔ Equity cushion
✔ Short-term strategy
In certain cases, private financing can bridge a valuation gap — especially when there is strong equity position.
The 2026 Ontario Reality
Appraisals are not emotional.
They are risk-controlled snapshots of recent market data.
In a tightening cycle, they skew conservative.
That doesn’t mean your property is “bad.”
It means lenders are cautious.
The Bigger Lesson
Deals don’t collapse because of headlines.
They collapse because of math.
When values compress even slightly, leverage shrinks quickly.
Understanding this before listing, purchasing, or refinancing gives you leverage.
Appraisal Came in Low? Don’t Panic.
If your Ontario purchase or refinance is at risk due to a low appraisal, review your equity position before walking away.
📞 Call 905-597-1225
Serving Toronto, Vaughan, Mississauga, Markham, Richmond Hill & all of Ontario