Appraisal came in $80k low — what are my options?

Yolanda, a few options: 1. Appraisal rebuttal — if you have comps that support the purchase price, submit them to the lender and request a reconsideration of value. Works maybe 30% of the time but worth trying. 2. Borrower brings additional cash to cover the gap 3. Seller price reduction (tough in this market) 4. Find a lender with a higher LTV tolerance — some will go to 80% on strong deals 5. Cross-collateral with another property if borrower has one What's the property type and market?

Appraisal rebuttal first. Always. Don't accept a low appraisal without fighting it.

it's a SFR fix and flip in Phoenix. the appraiser used comps from a different zip code which is frustrating

Wrong zip code comps is a legitimate basis for a rebuttal. Pull 3-5 comps from the correct zip, ideally closed in the last 90 days, and submit them with a written rebuttal explaining why the appraiser's comps are inappropriate. I've had appraisals revised up by $50-100k this way.

Wrong zip comps is a slam dunk rebuttal. Do it.

update: submitted rebuttal with 4 same-zip comps. lender sent back to appraiser for review. fingers crossed!! :$

rooting for you!! keep us posted!!

Oh man, I feel this in my bones! Just had a similar situation on a commercial refi for a small office building. Appraisal came in 15% under contract, which for us was about $120k. Our LTV went from a comfortable 65% to a tight 73% and the lender's cap was 70%. It was brutal. We did the rebuttal route too, focusing on recent sales within a 1-mile radius that the appraiser completely missed. We also highlighted some recent upgrades the borrower made that weren't adequately valued. It took an extra week, but the appraiser did come back up by $50k, which got us to a 69% LTV. Still not ideal, but it saved the deal. Definitely push hard on the rebuttal, Yolanda. Sometimes it's just about getting the appraiser to take a second look with fresh eyes and solid data. Good luck, hoping it works out for you!

This is a tough one, and unfortunately, it's becoming more common in this market. Yolanda, good on you for submitting comps; that's often the best first step, especially if the appraiser missed truly comparable sales. From a private lending perspective, if the LTV based on the *appraised value* is now 81% and your lender's hard stop is 75%, you've got a few paths. The most common is the borrower bringing more cash to close to bridge that $80k gap. If it's a fix-and-flip, sometimes we can structure it with a lower initial draw and a higher holdback for repairs, but the LTV on the *as-is* value remains critical. We've seen scenarios where a borrower can't come up with the difference, and the deal falls apart. For us, a 6% LTV jump like that means the risk profile changes significantly, and our cost of capital doesn't allow us to just 'flex' on that 75% without a major adjustment to terms, which usually isn't palatable for the borrower. Keep us posted on the rebuttal!

This is a frustrating one, and it happens. I just had a DSCR deal where the appraiser missed a recent comp literally across the street. We were looking at 75% LTV on a $600k purchase, but the appraisal came in at $550k, dropping us to 70% LTV. For your situation, $80k low is significant. Did you already submit comps for reconsideration? If not, that's step one. Look for sales within the last 90 days, similar bed/bath count, and within a mile radius. If the appraiser still won't budge, can your borrower bring more cash to close? Or, is there another lender that goes to 80% LTV on appraised value for that specific loan type? For a fix & flip, some will go higher, but for DSCR or bridge, 75% is often the cap. What kind of loan is this for?

This is a classic scenario where conventional lenders hit a wall. When an appraisal comes in low, and your LTV jumps from 72% to 81% based on the new value, most traditional banks will pull back. Their LTV caps are rigid, often 75% on appraised value, not purchase price. This is where hard money shines. We're asset-based lenders. If the property's actual value, even if not reflected in a conservative appraisal, supports the loan, we can often still close. We look at the asset's liquidation value, not just the appraiser's number. For a fix-and-flip, if the ARV is strong and the borrower has a clear exit strategy, we can go up to 70-75% of the *purchase price* for acquisition, and sometimes 100% of rehab. We've done deals at 80% LTV on purchase price when the asset justifies it, especially if there's a strong equity position post-rehab. The trade-off is higher rates, but you get the deal done and fast.

This is a frustrating, but not uncommon, scenario. An $80k gap on a purchase price means the appraiser likely missed something or used comps that weren't truly comparable. First, I'd echo the advice on providing comps for a reconsideration. We had a bridge deal last quarter for a 12-unit multifamily acquisition in Phoenix, $2.8M purchase. Appraisal came in at $2.7M, pushing LTV from 70% to 72.2%. Our borrower had a strong track record and we were able to leverage that relationship with the lender to get a slight waiver, but it was tight. If reconsideration fails, consider a secondary appraisal, especially if you have strong, recent sales data the first appraiser overlooked. For a borrower at 81% LTV, a hard money or bridge lender might be an option for a short-term solution to close, then refinance once value stabilizes or improvements are made. The cost will be higher, but it can save the deal. Also, explore if the seller is willing to come down on price or offer a small seller carryback to bridge the gap.