Thinking of buying or refinancing a home this year? If so, there’s a good chance an appraisal will be part of the process. And while most people know an appraisal affects their mortgage approval, not everyone understands how it works—or what lenders are really looking for in 2025.

Let’s break it down simply, so you can move forward confidently.

What is a Property Appraisal?

At its core, an appraisal is a professional estimate of a property’s value. It’s done by a licensed appraiser, usually required by your lender, to confirm that the purchase price (or your estimate of value in a refinance) is fair based on recent market data.

It protects you from overpaying—and protects your lender from lending more than the property is worth.

Why Appraisals Matter More Than Ever in 2025

With housing markets constantly shifting and interest rates still adjusting from pandemic-era lows, lenders are paying even closer attention to the details. Some reasons appraisals are getting more scrutiny this year:

• Market volatility: Prices have fluctuated in many BC communities, especially in Kamloops and other mid-sized markets.

• Insurance and rebuild costs: Rising costs of materials and labour have affected replacement value estimates.

• Tightening lender policies: In 2025, lenders are generally more conservative in higher-risk or rural areas.

What Are Lenders Looking For in an Appraisal Report?

Not all appraisal reports are the same—but they follow a standard structure. Here’s what stands out to lenders when reviewing them:

1. Current Market Value

The final number matters most, of course. This is the appraiser’s opinion of the home’s value based on local sales, listings, and condition.

2. Comparable Sales (“Comps”)

Lenders want to see 3–6 similar properties that have sold recently in your area. The more relevant the comps (in terms of size, age, layout, and location), the more solid the valuation.

3. Property Condition

If the property is in poor condition or has visible issues (like an old roof or foundation cracks), the lender may reduce the acceptable loan amount—or ask for repairs to be done before funding.

4. Upgrades and Renovations

Well-done renos can boost appraised value. But poorly done or unpermitted work might actually hurt your file. Lenders want documentation and quality.

5. Layout and Functionality

Unusual layouts, non-functional space, or things like missing closets or shared laundry in a suite can impact how a lender views value and marketability.

6. Zoning and Usage

Lenders want to ensure the home is legally zoned and being used as intended. Unauthorized suites or properties that don’t match zoning can be red flags.

7. Location-Specific Risk

If the home is in a floodplain, on leasehold land, or in an area with limited resale potential, it may reduce the appraised value or require special conditions.

Special Cases: When Appraisals Get Tricky

Here are a few 2025-specific trends we’re seeing that can make appraisals more complex:

• Strata properties with deferred maintenance: Lenders are nervous about buildings with special levies or ongoing lawsuits.

• Properties with Airbnb history: Some lenders are cautious if the home was previously used as a short-term rental.

• Remote or rural locations: Harder to find good comparables, so value is more subjective.

• Laneway homes and suites: The added value is highly dependent on legality and zoning.

How to Prepare for a Smooth Appraisal

Here’s how to make your appraisal as lender-friendly as possible:

• Clean and tidy: Presentation matters. A neat space can subtly influence perceived value.

• List upgrades: Share receipts or permit info for renos.

• Give context: Your realtor or broker (like me!) can help by providing the appraiser with relevant sales data or market insight.

• Be realistic: Don’t expect an appraisal to match the highest local sale unless your home is truly comparable.

What Happens If the Appraisal Comes in Low?

If the appraised value is lower than expected, you’ve got a few options:

• Renegotiate the purchase price with the seller (common in cooler markets).

• Increase your down payment to make up the shortfall.

• Switch lenders: Some may use a different appraiser or have different criteria.

• Get a second opinion: Not always accepted, but worth discussing with your broker.

We’ll always walk you through the best path forward if this happens.

Appraisal vs. Market Value: Not Always the Same

It’s important to understand: an appraisal is not the same as market value. Market value is what a buyer is willing to pay. An appraisal is what the lender is comfortable financing based on hard data. There can be a gap—and that’s where your down payment and negotiation power come in.

Final Thoughts

Property appraisals are a key part of the mortgage approval puzzle—and understanding how they work puts you one step ahead. The good news? You don’t have to navigate it alone.

At House & Home Mortgage Co., we work with appraisers and lenders every day to make sure your file is presented in the best possible light. Whether you’re buying your first home, refinancing, or investing in a rental property, we’ve got your back.

Questions about appraisals or how they affect your mortgage?

Let’s chat. You can book a call here: New Client Q&A

—Ryan & the House & Home Mortgage Co. Team