Real Estate

CMHC assessment much lower than sale price?

  • Last Updated:
  • Dec 8th, 2017 9:37 am
[OP]
Newbie
Oct 23, 2017
15 posts
5 upvotes

CMHC assessment much lower than sale price?

I'm wondering if anyone has experience with CMHC assessments coming in significantly lower than the agreed upon sale price (either as a buyer or seller).

I opted for optional CMHC insurance on a $490,000 offer and the CMHC assessment came back $425,000. I re-checked my data and comparables, and $425,000 seems really low. I'm not sure if I should interpret that really as a sign of the property value, or reflective of the insurance company's conservative approach.

TL;DR: are low CMHC assessments common, or am I missing something and maybe made a terrible offer?
9 replies
Deal Addict
Jul 3, 2007
1183 posts
1287 upvotes
Toronto
they are defintely tightening up but thats a big spread between the 2..... you can also try applying with Genworth or Canada guaranty
Member
Jan 15, 2010
326 posts
216 upvotes
Toronto
I hope you didn't waive your financing condition. That gap seems too big, even factoring in the crazyness of the 2017 GTA market. Did you buy in a small building that doesn't have any recent comparables?
Deal Addict
Jan 15, 2017
1678 posts
1148 upvotes
So CMHC did an appraisal at $425,000 for a home that you placed an offer of $490,000? Is CMHC refusing to provide default insurance or is it requesting a larger down pmt? Is CMHC requesting a full appraisal?

Most likely CMHC did an AVM - but with that much of a spread, you may want to insist on a full appraisal before you waive the financing condition.
[OP]
Newbie
Oct 23, 2017
15 posts
5 upvotes
DaMan12 wrote:
Dec 7th, 2017 10:24 pm
I hope you didn't waive your financing condition. That gap seems too big, even factoring in the crazyness of the 2017 GTA market. Did you buy in a small building that doesn't have any recent comparables?
I'm in an area where 4BR / 2 upper floors are rare. It's hard to find comparables. Location is Montreal, so part of the problem is that the market is rising now seeing how much more affordable it is than TO/Vancouver, plus the local economy has been strong lately.

The main comparable that seems to have been used was an unrenovated ground floor condo in the same co-ownership of 20 units that had been on the market for a year. Same size, but night and day in terms of quality. A totally different but viable approach for me would have been to buy something like that and renovate, but that was never my plan.

I didn't waive the financing condition, but my initial offer stipulated a down payment of 35%, so the seller knows I have the cash and could in theory satisfy the offer conditions by putting less down (i.e. he might have a legal case even with the low appraisal).
Last edited by PumpkinPete on Dec 8th, 2017 7:39 am, edited 1 time in total.
[OP]
Newbie
Oct 23, 2017
15 posts
5 upvotes
skeet50 wrote:
Dec 7th, 2017 11:23 pm
So CMHC did an appraisal at $425,000 for a home that you placed an offer of $490,000? Is CMHC refusing to provide default insurance or is it requesting a larger down pmt? Is CMHC requesting a full appraisal?

Most likely CMHC did an AVM - but with that much of a spread, you may want to insist on a full appraisal before you waive the financing condition.
They did a full appraisal. Apparently the evaluator was there for 7 minutes.

They are offering to insure $425,000. If I pay the difference up front, they will still cover the mortgage.
Deal Addict
Jan 15, 2017
1678 posts
1148 upvotes
A full appraisal. Home appraisals are not a hard science and a different appraiser could arrive at a slightly different value. Personally, I would see this as my overpaying for the unit and would see what options were available to walk away.
Deal Addict
Jul 3, 2007
1183 posts
1287 upvotes
Toronto
PumpkinPete wrote:
Dec 8th, 2017 7:41 am
They did a full appraisal. Apparently the evaluator was there for 7 minutes.

They are offering to insure $425,000. If I pay the difference up front, they will still cover the mortgage.
Try Genworth
Member
Jan 15, 2010
326 posts
216 upvotes
Toronto
So if you put 65K down they will insure the rest?
[OP]
Newbie
Oct 23, 2017
15 posts
5 upvotes
DaMan12 wrote:
Dec 8th, 2017 9:30 am
So if you put 65K down they will insure the rest?
That's right. I'm just trying to figure out if I went completely wrong on the price!

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