Appraisal requirements

[Joe Hughes]

I have self-financed all of my rehab/flips.  In an attempt to scale up the business, I looked at some Private Money options.  The single biggest stumbling block I came across was the absurdly low appraisals derailing the deal.  For example; earlier in 2015, I had two separate properties on my radar.  

#1: CMA came in at $95K. I engaged with a PML for a 65% of ARV loan ($61K). Appraisal was ordered and paid for. It came in at $42K. At 65% of that amount , minus points and closing costs, it was around $21K net proceeds. I passed on that offer and self-financed. The rehab was done in 2 months and the house sold on the first day for full ask of $94,900.

#2. Very similar situation as above, CMA at $91K. Appraisal came in at $41K. I passed, and self-financed. The house sold in the first week for $89,500.

I also had two properties that I passed on because of the same circumstances. These local appraisers just cannot fathom the concept of AFTER REPAIR value. I pushed back to both the appraisers and the PM lenders. I was told by all four PM lenders that they will take the opinion of an appraiser each and every time over that of an agent's CMA. The CMA proved accurate each and every time.

Enough of the back story.  Does anyone have any advice on how to engage a PML without the need for an appraisal?  I have spoken with multiple PML's and the answer is always the same; they need an appraisal in order to move forward.