FHA Appraisal Process

[Joy Y.]

I am negotiating with my tenant (through her father who is an attorney) for her to possibly purchase my 5 acre agricultural zoned farm and 2/2 house. They hired an independent appraisal ahead of the formal contract/loan process and are using that appraisal to try to negotiate down the price with me. 

Here is my problem: the appraiser used subdivision spec houses on 5,500 SF lots as comps. To adjust for the land, he came up with some valuation of land in the area that I'm not really certain how they came up with it of $.70 SF. I provided the buyer with what I thought were more appropriate comps of 5 acre properties that are in adjacent towns, all less than 10 miles away. They are insisting that their lender is telling them that for FHA the appraisal MUST be in the same town. Is that true? Even for a unique property? I'm skeptical of this comment, and feel it is being used as a tool to negotiate my price lower.

I would like to sell the property, but then again, I'm getting a nice cash flow with it as a rental too and I really don't want to go lower on my price. Though they are only asking me to go down $5K, I feel like I should just tell them to give me the contract at my asking price and we can negotiate down if we need to after an official FHA appraisal is done.

I also know of a house IN my zip code on a large piece of property 2 streets over (though it is 2.19 acres, not 5) with a similar SF house that is under contract and due to close at the end of the month for $50K MORE than my price. I am happy to wait until that property sells and then we can have a comp that more than justifies my price AND I will collect rent in the meantime. 

Looking for someone who understands FHA appraisal process and any feedback/ideas on other items here that might jump out at someone.