Appraisal is Low (Buyers Perspective)

[Joshua Cook]

I got a duplex under contract for 155k with 3% towards closing costs. It appraised low at $144k, which seems way off the mark to all parties involved, especially since an almost exact duplicate duplex that is a tad smaller and older down the street is pending and appraised at-value at $157,000.

The listing agent and seller said they would "drop" down to $150k (they were essentially there with the concessions) and drop the concessions but are not 100% unwilling to go down further. The seller agent is friends with that comp I previously mentioned; with that comp in their head, the sellers are hoping I break the deal so they can go back on market with that comp to back up a better price. They are not eager to sell considering the place is already tenanted with very good rent despite one unit being under market by $75/mo. With my estimates, it cash flows $500 (including PM, 2% vacancy, 5% repairs, 5% capex) giving me a 12.7% cash return, down from the 14.5% pre-appraisal.

I've talked to my bank rep, and she tells me that appraisals are highly regulated and it might be tough getting another appraiser to look at the property, but we've sent some comps, including the one I previously mentioned (although the appraiser also refers to that), to see if the guy would revise and proceed to seeing if I can get a new one. Meanwhile, the sellers' agent is asking us if we are going to cancel, yadayada.

The the most-weighted comp the appraiser used was a duplex that sold about a month ago, but only had a 1/1 in one unit. It sold for 140k, about 4k less than my duplex with 2/1s. There's not a lot of duplexes in the area as demand is high and inventory is low, so it's hard to find comps, granted. 

What are your recommendations? I've even looked into possibly just changing my lender, which would probably peeve off the seller, if I cant get a new appraiser here.

Pay the $6k extra, making my cash outlay $48,000 (it was 39,000 pre appraisal) since the return is good, and, come Feb, I can increase rents for a 14% cash return? Fight for a new appraiser? Get a new lender?

Or just scrap the whole thing and try again to find a property worth brrrr-ing despite not finding anything for months? I'm enamored with the brrrr method as Mr. Greene praises it, but I can't find those deals, and dont desire to hound potential sellers down, which is why I've opted to just simply find cash flowing deals in growing areas.