Blanket Appraisal

A blanket appraisal is a single valuation report covering multiple properties at once, often used by lenders, developers, or investors to assess the collective value of several units, parcels, or buildings under the same ownership or financing structure.

Blanket Appraisal – Quick Facts

• A single appraisal that includes multiple properties
• Used for portfolio lending, development projects, and multi-property financing
• May be used in pre-construction buildings where values are established years before closing
• Helps borrowers avoid shortfalls when market values fall below their contract purchase price
• Can introduce systemic risk if valuations do not reflect current market conditions

“A blanket appraisal occurs when the value of multiple units is appraised at one time. Blanket appraisals can be efficient in certain situations. For example, for a builder with several similar units, the appraisal value may be the same for each.” — OSFI

What Is a Blanket Appraisal?

A blanket appraisal is a valuation that aggregates several properties into a single comprehensive report. Instead of appraising each property individually, the appraiser evaluates collective characteristics, market conditions, and income potential of multiple units or parcels to determine a combined value. Lenders and real estate professionals use blanket appraisals to streamline financing for borrowers who own or are purchasing multiple properties under a single mortgage or lending facility.

Blanket appraisals are common in development projects, multi-unit residential buildings, land assemblies, and pre-construction condominiums. In these cases, the valuation may be completed several years before the actual closing date. This timing difference between the assessed value and the closing date can result in the purchase value not reflecting the current market value at closing.

Why Do Blanket Appraisals Matter?

Blanket appraisals matter because they provide lenders with a unified estimate of the total collateral associated with multi-property financing. A borrower financing several units in a development project or refinancing multiple properties under a single loan can rely on a blanket appraisal to demonstrate the combined value supporting the mortgage application.

In pre-construction contexts, blanket appraisals help prevent significant appraisal gaps when market prices soften after the purchase date. A borrower who purchased a unit at a higher contract price may rely on the blanket appraisal to avoid a closing shortfall. This reinforcement in value can reduce the likelihood of borrowers defaulting on purchase contracts in declining markets.

However, blanket appraisals can also mask changes in actual market value. When valuations are not updated to reflect current conditions, lenders may rely on collateral that appears stronger than it is. This lack of proper valuation contributes to market distortions and can introduce systemic risk if many properties are financed at values that no longer reflect current market prices.

How Do Blanket Appraisals Compare to Other Appraisal Types?

Individual Property Appraisals

An individual property appraisal evaluates a single property and is typically required for standard residential mortgages. This method offers a detailed, property-specific assessment but is inefficient when numerous properties are financed under a single loan.

Portfolio Appraisals

Portfolio appraisals evaluate a group of income-producing properties owned by a borrower (individual or corporation). A blanket appraisal functions similarly but may include a wider mix of properties or pre-construction units tied to a single financing structure.

Development or Construction Appraisals

Construction appraisals focus on project plans, land valuation, and the building’s future completed value. Blanket appraisals may be used in development projects, but do not always include the “as-complete” valuation method unless specifically requested by the lender.

How Do Lenders Use Blanket Appraisals?

Lenders use blanket appraisals to determine whether the group of properties provides sufficient collateral for a multi-property mortgage. The appraisal helps support underwriting decisions, risk assessment, and loan-to-value calculations. Blanket appraisals are helpful for builders and borrowers in pre-construction developments because the valuation can be applied to all units in a building, streamlining financing.

Lenders may also use blanket appraisals during periods of market volatility when individual unit values fluctuate. By relying on earlier valuation data, lenders can maintain consistency across mortgage approvals for units purchased at the same contract price. However, regulators have noted that this practice can obscure the gap between contract prices and current market values.

How Do Borrowers Obtain a Blanket Appraisal?

Borrowers obtain a blanket appraisal through several steps when working with a lender-approved appraiser. The following steps allow lenders to evaluate the collective value of multiple properties under the same financing arrangement:

Step 1: Confirm with the lender that a blanket appraisal is acceptable for the intended financing.
Step 2: Provide property information for all units or parcels included in the valuation.
Step 3: Coordinate site visits or provide documentation for pre-construction units, land parcels, or completed buildings.
Step 4: Receive the final blanket appraisal report that includes the combined market value supported by comparable sales, land valuation methods, or income analysis.

Common Mistakes and Misunderstandings for Blanket Appraisals

• Believing blanket appraisals always match current market conditions
• Assuming lenders prefer blanket appraisals for all multi-property mortgages
• Forgetting that lender approval is required before ordering a blanket appraisal
• Underestimating the timing mismatch between contract valuations and closing dates in pre-construction projects
• Assuming a blanket appraisal lowers appraisal costs in every scenario
• Overlooking variations between property types, tenancy structures, or unit conditions

Regulatory and Market Considerations for Blanket Appraisals

Blanket appraisals may create gaps between contract prices and current market values, particularly in pre-construction condominiums where valuations are completed long before closing. According to industry commentary, timing mismatches can lead unit prices to appear stable even as market values decline. This timing mismatch affects how lenders assess collateral strength for insured and uninsured mortgages.

OSFI has identified the timing mismatch as a prudential concern because valuations completed years earlier may not reflect current market conditions. The practice can obscure risk in a declining market where borrowers face reduced property values at closing. Market observers also note that blanket appraisals may delay or soften visible price corrections, influencing perceptions of market stability.

Frequently Asked Questions (FAQ) About Blanket Appraisals

Related Terms

• Portfolio Appraisal
• Home Appraisal
• Market Value
• Loan-to-Value (LTV) Ratio
• Multi-Property Financing
• Underwriting