Selling or Refinacing but facing Low Appraisal.. what can you do?

Reading all the big advertisement and news about low interest rate, real estate market has rebounded,  few of my friends/clients in Northern Virginia area  thought it may not be a bad idea to refinance their homes and save extra bucks on their monthly mortgage.
Went to their lenders got the incredible rate on the home but when the appraisal came out they were shocked that their homes are still not within the ratio of what lender wanted in one case it was 80% loan amount and 20% equity. Basically they may have to bring money to close the deal.

After they shared their experience,  I asked them if they reviewed their appraisal report and have asked a Realtor to help them with the comparable in the neighborhood? I wasn't surprised when my savvy friends did not bothered to ask for the appraisal copy (which they paid $$$ for). They took their lender's words and decided not to refinance their home.

Few months back I had a listing which was appraised bit lower than our contract sales price. As a professional Realtor who knew the area, I was bit surprised how this could have happen. I asked the selling agent to share appraisal report.

Now the big question what can one do ?????

On my listings two things happened, the appraiser was not a local person, hence did not know the area/neighborhood. Second mistake which was him not being local, he had mixed the communities when he created the report. The two neighborhood hold a vast difference in their prices and that was the reason appraisal came out lower.

To correct this, we appealed the appraiser. I provided the comparable plus all the updates my clients had done in past couple of years including new roof, windows & updated kitchen compared to the homes they had been compared to. It is called the appeal process. In this process you need to provide as much details as possible between your home and comparable homes. If you are a consumer ask a Realtor to help you out in preparing the comps of your home.
Submit this to the lender and request for the appraisal to re-evaluated the comps and provide updated appraisal report. This has be to accepted by the underwriter so work with the lender that knows the process.

To summarize here is what you can do...
1. Ask a local Realtor to help you with the comps before you start your financing process.
2. Prepare a list of recent updates you have done in the home. Painting a wall is not an update, roof, window, kitchen, finishing basement are all example of adding value to the home.
3. Ask the appraiser where they are coming from, request for a local appraiser who knows the market. Give them a copy of the comps  that your Realtor had prepared for your home plus list of updates in the home.
4. Ask your lender for a copy of the appraisal.
5. If low, prepare as much as possible to justify/challenged the appraised value of your home.

Hope some of you may be able to reap the benefit about this process.