A broker’s guide to AVMs, desktop, drive-by and full appraisals

Beginning with an AVM does not guarantee that a file will remain there. It’s often the first step in a lender’s decision tree, and each product below builds toward more certainty (and more cost) than the one before it.

Automated Valuation Model (AVM)

An AVM uses property information, market data and statistical modelling to generate an estimated property value, often within seconds. It’s an automated valuation rather than a traditional appraisal completed by an appraiser. RPS’s Cascade Framework strengthens this process by selecting the most accurate result from multiple commercial-grade AVMs, helping deliver the highest possible level of valuation accuracy and confidence for each property.

An AVM works best for a relatively standard residential property in a well-covered urban or suburban market, surrounded by sufficient recent comparable sales, with reliable property data; for example, a conventional home in a subdivision where many similar properties have recently sold. Some lenders attempt an AVM first whenever their internal policy allows it, since it reduces turnaround time and avoids scheduling an appointment with the homeowner.

An AVM isn’t the best choice for rural or remote properties, unique or custom-built homes, properties with few recent comparable sales or incomplete data, homes under construction, and fast-moving markets. Brokers should prepare clients for the possibility of escalation from the outset.

Desktop appraisal

A desktop appraisal is completed by a designated appraiser without a physical inspection of the property. The appraiser analyzes available information: MLS® listings and photographs, municipal assessment records, land-registry and property records, prior appraisal or inspection reports, aerial and street-level imagery, sales history and recent comparable transactions. Unlike an AVM, it incorporates professional analysis and judgment; however, because the appraiser never visits the property, the conclusion is limited by the quality and recency of that information.

A desktop appraisal tends to work well for a recent purchase, where current MLS® photographs and listing details already capture the home’s interior condition and features. According to the Appraisal Institute of Canada, desktop and drive-by reports for mortgage financing are generally intended for first mortgages where the property isn’t under construction or renovation, recent property information is available, and the lender accepts the more limited scope of the report.

Where it falls short is long-held properties with undocumented changes. A borrower may believe their property is worth $700,000 because of a renovated kitchen, a finished basement, or an addition, but if the appraiser only has access to older property records, none of that shows up in a desktop report. The lender must then decide whether to proceed on the desktop result or upgrade to a full appraisal. This distinction is useful for brokers to have on hand when explaining to a client why a higher expected value may require an inspection to support it.

Drive-by appraisal

A drive-by appraisal draws on the same research as a desktop appraisal, but the appraiser also completes a limited exterior observation, confirming the property’s existence and general appearance, dwelling type, apparent exterior condition, neighbourhood characteristics, and whether visible conditions are consistent with the available records. The appraiser does not go inside the property.

This product tends to suit standard properties where the lender wants more confirmation than a desktop provides but doesn’t need a full interior look. For example, lower-risk transactions with sufficient comparable sales and no material need to verify interior condition.

Because the appraiser never enters the home, a drive-by can’t confirm interior renovations, finishes, deferred maintenance or layout changes, and it’s generally insufficient for a property under construction or renovation. In those cases, the lender is more likely to order a new-construction appraisal, an as-is/as-complete appraisal, or progress inspections instead.

Full appraisal

A full appraisal is the most comprehensive product. A designated appraiser completes an interior and exterior inspection and analyzes the home’s size and layout, age and condition, construction quality, renovations, site and neighbourhood, functional characteristics, comparable sales and marketability, typically with interior and exterior photographs and a single concluded value.

Lenders lean toward a full appraisal when significant equity is being withdrawn, the property is rural, remote, luxury or unique, it’s been substantially renovated, it’s tenanted or contains rental units, it’s under construction, or when the file simply falls outside the lender’s standard risk parameters and a lighter-touch product hasn’t provided enough support. Full appraisals are also common for refinances generally, since a home’s current condition (after 20 or 30 years of ownership, upkeep, or neglect) often diverges meaningfully from what’s on file. An interior inspection lets the appraiser confirm that directly rather than relying on assumptions.

Specialty scopes within a full appraisal

A handful of situations call for a modified scope, which the lender should specify when placing the order:

• New-construction appraisal: This is for vacant land, partially completed or nearly completed properties. The appraiser works from building plans, specs, contracts and budgets to project a value on completion, with progress inspections confirming work at each stage before further funds are advanced.
• Full appraisal with market rents: Used when rental income factors into underwriting. Instructions should specify exactly which component needs a rent estimate (the whole dwelling, a basement apartment, a garden suite, etc.)
• As-is/as-complete appraisal: For properties undergoing or about to undergo substantial renovation. The appraiser provides both a current as-is value and a projected as-complete value, the latter supported by detailed plans, specs and budgets.
• Acreage appraisal: This is for properties exceeding a lender’s standard residential land guidelines, valuing the residence together with a defined amount of land. Treatment of excess land, agricultural use and outbuildings depends on the lender’s policies.

Market conditions can change the required product

Comparable sales matter for every valuation product, but they matter most when the market is moving quickly. An AVM depends on market and property data; a desktop or drive-by appraisal depends on available records and comparable transactions. If recent sales don’t reflect current conditions, a lender may require more analysis or a more comprehensive product — particularly relevant for pre-construction properties, where a purchase price or blanket appraisal set years earlier may no longer reflect value at closing.

In July 2025, OSFI clarified that lenders should have policies requiring timely, realistic and substantiated valuations that reflect a property’s current value, noting that a valuation failing to reflect current price levels at origination wouldn’t meet those expectations, regardless of whether it was based on a blanket appraisal or another method. For brokers, the takeaway is an earlier purchase price, appraisal or estimated value may not hold up when current market evidence points elsewhere.

Staying ahead of the process

Brokers don’t choose which valuation product a lender requires, but providing complete, accurate property details upfront (renovations, rental units, unusual features, recent MLS® data, construction plans) helps keep a file moving and reduces the odds of a late-stage escalation catching a client off guard.

Once an order is underway, RPS’s Track My Order tool gives brokers real-time visibility into where the appraisal sits and flags potential roadblocks before they cause delays. Combined with a working knowledge of how lenders choose between AVMs, desktop, drive-by and full appraisals, it’s one more way brokers can set expectations early and keep files on track.