20% down on buying price or appraised price

[Joe Capobianco]

i received two different answers from two different people on the same question about the down payment of the home. 

the situation is the house im buying was appraised for $207k. on the market for $200k and we agreed on a price of $185k.

my cousin works for a title company and said all i have to do is get my loan from the bank at 20% of the $207k appraised value. ($166k). in order to avoid PMI.

my realtor said the 20% to avoid PMI is based on the agreed $185k and not the appraised $207k.

just wanted other opinions on this situation. thanks in advance