Trouble with Appraisals

Real Estate Investing
1

I have a ratified contract for $135k on a flip house and the FHA appraisal just came in at $120k. One of the 3 comps is a short sale! I complained to the loan officer (Suntrust) and she informed me that short sales are allowable as comps.

I sent an alternate comp to the bank and their underwriter will look at it and decide whether they think it is an appropriate comp. If so, they will send it to the appraiser for his consideration.

Reducing the price by $15k will take this from a nice payday to being in the hole.

Has anyone else had this problem? Were you able to get anything done about it?

The problem now is that if the appraisal stands as is, I am stuck with this value for 6 months for any FHA buyer.

Thanks for any help you can offer,
Barbara in Glen Allen, VA

2

Your response depends on your market. My market is very strong. This has happened to me twice in the past year, Both times I simply told my Realtor to relist the property and note in the listing that HUD offers will not be considered. Both times I sold to a non FHA buyer at or above the prior contract price. If your market is not so strong, then you need to weigh your options accordingly.