An 11k appraisal gap on a duplex purchase, closed by the seller meeting in the middle

Can the gap be carried as a second lien or a seller note instead of cash. It is worth confirming whether a lender allows that on a residential two to four unit loan, since the answer varies by lender and by how the file is structured. Has anyone raised that directly with underwriting, or is it more the kind of thing that exists in theory but rarely shows up on an actual closing statement.

The numbers look survivable, but 250 a month across two units is light. On comparable duplexes, repair spend has tended to run closer to 200 per unit per month once the years with a water heater replacement are counted in. A single meter for both units is also a real exposure, since there is no way to bill back one tenant running the tub for weeks. Worth running the vacancy version too. One unit empty for two months at 1,375 is 2,750 out, which is close to a full annual reserve plus a turn cost. Not a bad deal necessarily, just a reminder that a closing-day cash gap is rarely the number that ends up hurting most.

Having the walk away number on paper before the emotion arrives is most of the skill. Everything else you did was cleanup.

The comp problem here is worth understanding because it repeats. There is simply less transaction volume in 2-4 units than in single family, and in a slow market an appraiser can be working from four or five sales in a whole county, some of which are odd conversions. That is part of why buyers of these get surprised more often on value than single family buyers expect. Also worth knowing that a reconsideration request usually goes through the lender rather than direct to the appraiser, and the appraiser is under no obligation to move. The process here was handled correctly and still lost the gap, which is the normal outcome. The leverage was the seller's carrying cost, and that read was right.