You probably want to know that you don’t need an appraisal if you put less than 20% down because the mortgage is insured by CMC. That mortgage is insured so you don’t need to do that. They do what they call an electronic appraisal. In the old days it used to cost you, but now it’s just a free service, so they just add to your mortgage if you have less than 20% down.

If you have more than 20% down, now the risk is on the bank’s side so that banks have to do their due diligence. And so what they do is they have to order an appraisal to an accredited appraiser who’s well respected in the industry; and it’s just anybody, it has to be a certain type of people that you want to use. And what happens is that the appraiser goes out to your home and appraises it.

What they’re doing is they’re looking at the cost for your place and they’re looking at the comparative analysis between that home and three other homes in a like area at a like price. Then they do their counterbalancing; you might have your basement finished and this one’s not finished, you might a little bit of a larger yard, you might have an extra bedroom, may have an extra bathroom. And so they do that cost comparison

They give the bank the security in knowing that they can sell this home within a reasonable period of time on the market if you go into foreclosure.

Catch Bill Macklem of Dominion Macklem Mortgages at BilliMac.com every Saturday morning at 10am on the AM650 Radio Real Estate Show in Metro Vancouver with host Tom Lucas and Sheri Brown.