Currently, in February 2025 in residential lending, 40 percent of applications are for refinances as borrowers pay off expensive credit card debt. Appraisals are often major stumbling blocks for those looking to refinance their homes. Often, appraisals come back too, low enough not to support the new loan. Low appraisals are becoming a bigger problem for many would-be buyers and refinancers as home values have stabilized and appreciated in most markets. Appraisals are based on recent sales prices of comparable properties. And in rising price markets, those sales prices might not be high enough to support the newest deals.

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Over the years, the federal government has issued rules aimed at improving the appraisal process as it pertains to mortgages on rapidly appreciating homes, or for any home for that matter. Orion’s brokers remind clients that lenders, servicers, and investors in loans want to make sure that the value of the property supports the loan amount. No one wants to loan $300,000 on a property worth$200,000, for example. Orion’s management doesn’t see this changing.

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Borrowers can help, in a limited way, in the process, and here are some ways to make sure the appraisal goes to your and your client’s liking. If the appraiser doesn't know the area intimately, chances are the appraisal will not come back close to what a property is really worth. You can try to request that your lender send a local appraiser. If possible, provide your appraiser or lender with at least three solid and well-priced comparable properties. Websites includingRealtor.com, Zillow and Trulia offer recent sales prices and other details.

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If your client is asking about making minor renovations, start with their kitchen and bathrooms. Wood floors, landscaping and an enclosed garage can also increase values. Improvements and additions made below grade, such as a finished basement, do not add to the overall square footage of the house. A basement renovation can recoup roughly 66 percent of that in added home value. That's not as good as an attic bedroom, which will recover 73 percent of its cost. Even similar bedrooms typically count for more if they are upstairs instead of downstairs.

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If your client has put money into the house, prove it; before-and-after photos, along with a well-defined spreadsheet of what was spent on each renovation, could persuade an appraiser to turn in a number that far exceeds what he or she first called out. Don't forget to highlight all-important structural improvements to electrical systems, heating and cooling systems - which are harder to see, but can dramatically boost value. If your client’s town has recently seen exciting developments, such as upscale restaurants, museums, parks, or other amenities, try to make sure your lender or appraiser knows about them. Even jaded appraisers can be swayed by a good looking yard. That advice holds true indoors, too. Get rid of some clutter and it makes the home appear larger. Finally, brokers will tell clients, “Don't follow the appraiser around like a puppy!”

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