Appraisers aren’t keen to train their future competition - they gain nothing out of it. 

Friends close/enemies closer.always great to know the competition.

I have done it many times and it often separates me from the competition. 

Even in high traffic cities it can be tricky to keep occupancy over 85%, so you would have to be very competitive with your property to hit the 60% mark in my opinion where seasonality is so strong. 

In order to get the most competitive rate this way, you'll probably have to stay below 70 LTV and above a 1.3 ratio (that is why I was asking about if your sister would be paying rent).

Should I back out the deal and wait for another even with being in a fairly competitive market?

Are you getting quotes to keep it competitive? 

If buyers are financing with 10-20% down and hoping to secure a competitive property, I'll provide them an accurate competitive market analysis (CMA) and have my lender partner (or myself as a licensed NMLS mortgage broker) breakdown the differences in loan terms for an escalated at various price examples. 

Another issue is simply more competition.

The competition in your market will send a demo crew in and have the work done fast.