@Elizabeth Southall All you can do is appeal the appraisal results, and if unsuccessful, proceed with the lower value or start over somewhere else.

It’s the appreciation that makes investing in these lower tier neighborhoods worthwhile.

However you will get to pay significantly less in tax and therefore have a significantly lower mortgage. 

The east side has a lower median income, and the west side is more affluent.

As a seller would you question this and renegotiate a lower percentage of purchase price (3% to listing firm only), or request it is a more even split?

We would like to purchase as a owner-occupied, to get a lower rate and to put a downpayment of only 10%. 

Recently, I learned a valuable lesson that made me step back and reassess how I approach offers to sellers and agents.One example is a duplex deal where I submitted a lower offer due to the significant repairs needed.

Most chase the money and shrug off the lower risk proposition that will allow them to eat well for a few years.

While nearby multi-family duplexes might slightly impact the appeal for certain buyers, they shouldn’t necessarily lower the resale value if the house is well-renovated and priced competitively.

To illustrate this there are probably 50+  active MLS properties in North Philadelphia/South West Philadelphia and other lower tier neighborhoods at any given time where you can complete the BRRRR  method but the real estate is lousy.