Closing Thursday, underwriter denying loan

[Richard Duane McClellan]

Hi Bigger Pockets,

I ran into a problem yesterday with my first investment property that I am trying to purchase and I need some advice.

Situation:

The underwriter for my conventional loan is denying the loan based on the property being listed in "fair" condition by the appraiser.

Appraisal:

In its current condition, the appraiser is saying the property is worth $160,000.  Items listed in fair condition include: the 15 year old carpet, new appliances, counter tops, sinks, bathroom cosmetics, minor wood rot, new windows, and loose stairs on one of the patios and new air conditioners.  These are things that I would have done anyways. The underwriter is requiring all items on the appraisal marked as fair be repaired to average condition.

Buyer (me):

I am able to put 20% down and I have excellent credit. Additionally I will be owner occupying this property.

Seller:

The seller is very unlikely to provide more than 1 extra day to close.

Property:

The property is located in Richland Hills, Texas and it is a duplex.  The purchase price is $170K and it is a FNMA Homepath property.  I have the cash  to cover the difference in appraisal and sales price and enough for 20% down.  

Financial Performance:

Total repairs are estimated at $40,000, closing costs at $10,000, and purchase price at $170,000 for a total cost of $220,000. Using $1,100 per month rents each ($2,200 total), I think my NOI will be $14,573 in the first year and my BTCF at $4,900. Using a 7% cap rate, I think the property value is $206,000 and the return on equity (cash on cash) at 20% is 13% annually.

Do I have any options to make it to close on Thursday for this property?  My lender is a local bank and will provide a renovation loan to me, but it will take 2+ weeks to make it happen.  

Thanks in advance for any advice or options.