Small square footage - challenges?

[Kelly Layne]

We have a line of credit.  Used this line of credit to make a full price cash offer on a 350 square foot home (cabin) sitting right off Kentucky Lake in rural Western Kentucky.  We were competing with four other buyers and we got the deal because we were the only ones willing to pay cash and close in two weeks.  But, that meant it tied up a lot of our available cash so, even while we were waiting on it to close, i was already in contact with our banker to take out a loan on it...no issue thus far.  Closed on the cabin.  Then, went to take out a loan against it.  

Appraiser would not offer an appraisal because of the square footage.  Said they would only offer a comp if they had a mini house as a comp in the area (which they didn't).  And, even if they did...they would only give approximately a $25/ft value because of the size of the home.  So, they refused to give a comp.  

Our banker and realtor both worked with other appraisals and they all stated that it's a really gray area.  We eventually ended up just having them appraisers give us an appraisal on the land and we pulled out about half of what we have in it so, we can live with that but my question to the group....have you run into square footage being an issue?   I had assumed that it was simply a ratio...meaning, they calculated a price per square foot and applied that to the number of square ft in your property regardless of the size of the property.