Inspections and Appraisals
Inspections and Appraisals
In Ontario, once an offer is accepted and becomes conditional, the buyer typically arranges a home inspection within the timeframe set out in the Agreement of Purchase and Sale (APS).
The home inspection is conducted by a qualified, independent inspector who evaluates the overall condition of the property, including structure, roofing, electrical, plumbing, and HVAC systems.
In some cases, buyers may also consult additional specialists (e.g., roofing, structural, or environmental experts) if specific concerns arise.
If the purchase is conditional on financing, the lender may also order an independent appraisal. This is completed by a licensed appraiser to confirm that the property’s market value supports the agreed purchase price. The appraisal helps protect the lender by ensuring the loan is properly secured by the value of the property.
For certain rural or specialized properties, additional assessments (such as septic, well water, or environmental testing) may also be required.
Contingencies (Conditions)
A contingency, also known as a condition, is a clause in the APS that must be satisfied before the agreement becomes firm and binding.
Common conditions in Ontario include:
- Financing condition (mortgage approval)
- Home inspection condition
- Status certificate review (for condominiums)
- Sale of buyer’s existing property (less common, but still used)
During the conditional period, the buyer has the right to review all relevant aspects of the property, including:
- Property condition through inspections
- Financing and insurance approval
- Legal documents and disclosures (as applicable)
Possible Outcomes of the Conditional Period
Once conditions are reviewed, one of two things typically happens:
1. Conditions are fulfilled and waived
The agreement becomes firm, meaning all conditions have been satisfied and the transaction will proceed to closing.
2. Renegotiation or termination of the agreement
Based on inspection results or other findings, the buyer may request:
- Repairs
- A price adjustment
- Credit at closing
Alternatively, if conditions are not met, the buyer may have the right to walk away from the agreement (if properly written into the APS).
Negotiating During Conditions
When a buyer requests changes after an inspection, it is important to respond carefully and strategically.
Your REALTOR® plays a key role in:
- Evaluating the validity of the request
- Advising on market impact and leverage
- Negotiating fair and reasonable outcomes
- Protecting your financial interests while maintaining a successful transaction
Experienced representation can significantly influence the final result of these negotiations.
Financing Approval and Appraisal
Whenever possible, sellers are encouraged to accept offers from buyers who have mortgage pre-approval or full approval from a recognized financial institution.
In Ontario, stronger offers typically include:
- Written mortgage approval (not just pre-qualification)
- Short or waived financing condition (when appropriate)
- Clear documentation from a lender
As part of the financing process, the lender may require a third-party appraisal to confirm that the purchase price aligns with current market value.
A well-structured conditional period helps protect both buyers and sellers while ensuring the transaction proceeds smoothly and with confidence.