2nd appraisal lower than purchase price (1st was higher)

[Steve Paczesny]

Hello,

I'm in escrow on a foreclosed duplex with Freddie Mac, this is my first property.

Initially they were asking 95k, then dropped it to 85k after it was on the market for 30 days. I offered 78.5k, and they counted at 81, which I accepted (based on inspection and financing contingency). The place needs a new roof (which I knew going into it) and has some minor maintenance/updating needs, but it's what I was looking for - something I can add some value to.

I went though UWM Credit Union for financing, where I qualified for a 5% down conventional loan. My appraisal from them came back at 89k, but they ended up NOT lending on the property, due to the roof needing repair and a couple other maintenance issues.
So I decided to give the place one more shot with a different lender, ended up going through US Bank with a 20% down conventional loan. The appraisal came back today, at 75k. Which is 6k less than purchase price.

Now I'm not sure how to proceed. I'm surprised to see a 14k difference between the two appraisals. I haven't talked to my lender yet (they emailed me the appraisal tonight), but from what I understand a bank will not lend on a property if it comes in under appraisal, and I don't have the cash to throw down an extra 6k to make up the difference.

Would you think my best option is to tell the bank to drop their price to 75k or I walk away? That's what i'm thinking of doing. Any advice would be greatly appreciated. Thanks.

[Silvio Brigliadoro]

There are options.. I would try to find a licensed contractor that would be willing to give you a written bid of the MANY EXTENSIVE repairs needed, hopefully making that bid substantial (more than 6K) and submit it to the seller along with a repair request credit to cover the difference needed to close and the copy of the appraisal.

You could also find potential mistakes in that appraisal and submit an "appraisal rebuttal" the appraiser could potentially be willing to revise that appraisal.

You could try a 3rd. lender.