Home purchase severely under appraised ... Advise?

[Hady Farag]

Hello BP,

First time home buyer here and need some insight/advise on my current situation. I'm currently under contact on a MFH for $650,000 and had an appraisal come back at $475k, approximately $175k under that price. My agent is going to see about challenging the appraisal but It sort of threw a wrench into my plans. Does this happen often? I'm a bit concerned because I also don't want to be underwater on a property that I fought to have the appraisal adjusted when in fact it's only worth $475k. Here's some more information about the property and what appeared on the appraisal;

• It's a 3 unit with 3br/2ba in each unit that can rent between 1.8k-2k ($5,400 revenue total)
• Located in Newark, NJ in the University Heights area - a great and growing part of Newark
• Appraiser used comps of 5 recently sold homes from $425 - 500k yet there 16 more comps in the area that were sold for 585k and more

Any advise on how to deal with this lower appraisal would be much appreciated. Thank you BP fam!

[Russell Brazil]

Switch lenders, get a new appraisal. Unless its FHA, then you're just screwed..