The time has come for an appraisal on our home, complete with a 2 bdrm legal suite. We wish to re-finance and hopefully move on to the next one, we have no intention of selling. I called around to my mortgage broker, our lender and a couple of agents for a recommendation. The same name kept coming up so we called him. He has many years of experience to his credit and liked what he saw in our property. Within a few minutes of being here, he basically said that the 2 bdrm legal suite that we added, does not add any extra value whatsoever. Some other things he mentioned made me question his professionalism. He stated the basement is liveable, usable space and the fact that its suited makes no difference. He also stated the potential buyer would be a young couple with maybe 2 kids and they would have to re-open the stairway to have use of the basement and would not be interested in a suite to offset the mortgage cost. We were speechless and should have ended our working relationship right there, but no, we went ahead with it because we were excited about the next one. The appraisal came back and I believe it is fair market value for a single family home in this area without a suite. None of the comparables he used had suites and sold 5 months ago. Our home is located in central Nanaimo and very close to the hospital (which he said was a negative). Yes, it is a noisy street but the location is desirable.
What can we do now as we feel the appraisal is at least 20k short?

Go to the bank. They usually order their own appraiser. Or get another appraiser.

Not every buyer likes a suite, but of course house with an upgraded basement, if legal or illegal, should have more value than with an ugly unfinished basement. And yes, the legal status has some value.

Shop around. An appraisal is an opinion.

Talk to your lender and see if they will allow a second appraisal and take the higher value. Keep in mind refinance appraisals are always more conservative than purchase appraisals. Many banks instruct the appraiser to be sure the value represents what they would be able to dump the property for in a short time frame (2 - 3 months, for example).

A few years ago for a refinance we had a legally suited house appraise for about the same amount as a single family house with a finished basement ($300k). We knew this was ridiculous, even considering the conservative nature of refi appraisals. We spoke to the bank and they said we could contact the same appraisal company and request another appraiser. We called and asked for someone with a lot of experience with legally suited houses. The second appraisal was $330k.

I like your response, I believe a phone call is in order. Thanks for your input.