Exceeding 20% rule

[Gregory Childs]

So, we buy right - we rehab the property - we advertise and the we get a valid contract signed. All is good, even the apprasial exceeds our selling price.. and our profit margin is strong (around 30%).
Then we get the call - can we substantiate the repairs we made for the lender. We submit our receipts and SOW and the underwriters want to max out our selling value at our cost + repairs made.. even though the appraisal "they" ordered comes in higher than our selling price.
Is anyone else running into this? It's happened to us in both GA & AZ.