The appraisal came back 190k under contract on a 3.1M flip and the lender is now at 65 percent of the appraised number.

Question

That gap is not abstract. If the contract was at 3.1M and the appraisal lands at 2.91M, a 65 percent loan against the appraised value puts the lender at 1.89M. If the original underwrite assumed 65 percent of contract price, that was 2.015M. The borrower now has to cover a 125k shortfall out of pocket at closing, on top of whatever the original equity requirement was, and that is before asking whether the buyer's financing has the same appraisal problem on their side. A 190k miss on a 3.1M asset is only six percent, which is well inside what a comp selection argument can move, so the first question is whether the appraisal is actually wrong or whether it priced the market correctly and the contract was optimistic. Those two situations call for completely different responses. If the comps support a challenge, a reconsideration of value with three tightly matched sales and a written argument about the appraiser's adjustments has moved numbers before, though it takes two to three weeks and the lender has to agree to wait. If the comps do not support a challenge, the borrower is looking at a capital call, a renegotiated contract with the buyer, or a hard conversation with the lender about a bridge to a different exit. What the appraisal said about the comparable sales it used, and whether those comps were arms-length or distressed, is the sentence that actually settles which path is worth chasing. Did the appraiser's grid show the adjustments for condition and finish, or did it treat the subject as equivalent to unrenovated sales?

quentin_arriaga · Answer

What were the days on market for the comps the appraiser pulled?

shane_dougherty · Answer

@OP the line that caught me was "six percent, which is well inside what a comp selection argument can move," and that is true but it cuts both ways. I have watched three reconsideration requests on luxury flips fail not because the comps were wrong but because the appraiser had already bracketed condition correctly and the borrower just did not want to hear it. The one thing I have never seen work is submitting a ROV with comps the original appraiser already considered and rejected, it just makes the lender nervous that the borrower is in denial and the file gets extra scrutiny from the review desk. What actually moves the number is finding a closed sale the appraiser missed entirely, not arguing about a 15k adjustment on GLA. On the lender side, that 125k shortfall is not always the crisis it looks like on paper if the borrower has a clean track record with that lender, I had a project in Southlake in 2022 where we were 90k short at closing and the lender let us escrow holdback funds against a price reduction waiver rather than a full cash call, but that took a phone call not an email. What finish level is this property, because at 3.1M in most Dallas submarkets there are maybe eight true comps in a two year window and if two of them were estate sales the appraiser may have been right.

The appraisal came back 190k under contract on a 3.1M flip and the lender is now at 65 percent of the appraised number.

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