Selling our duplex, appraisal coming back really low

[Cory Anderson]

Happy Monday everyone!

We just finished a full (pretty much everything) renovation on our duplex that we put up for sale and received 3 offers, went into contract $16k over ask, 17 days on the market. We averaged 1 showing a day. The buyers wanted to live in one, rent out the other, and chose an FHA loan; great house hack for them. Their appraiser reached out because apparently he couldn't find any comps. Our agent went back 12 months and submitted some reasonable comps as well as a bullet list of everything that was newly replaced. The appraisal is coming in $105k low, 15% below our offer. I'm aware they don't look at tax appraisal, but for context, that was our asking price; seems reasonable. I don't think the buyers have even been notified yet.

With such a huge discrepancy, I'm trying to brainstorm some options ahead of schedule. Our next offer is effectively $31k less, but a conventional loan, and the third was as a cash offer, $24k less than no. 2. Can FHA appraisals really bring this much disparity compared to a conventional loan? Am I really to think that the conventional loan could have a disimilar outcome with another low appraisal? Lastly, what might a creative own finance scenario look like to make up the difference?

Thank you for any input!