Appraisal Problems

[Kevin Suksi]

We have a flip that we are doing here in Metro Detroit. We listed the house for $125,000 and have had multiple offers within the first week. We accepted an offer at full price with 5K in concessions, netting 120 (FHA offer). Then another offer came in, a conventional mortgage offer at $125K with no concessions and $30,000 down. Our realtor tells us there is a third potential full price offer waiting in the wings.

The appraisal came back at $111,000, so the first buyer revised their offer to this amount less $2,000 in concessions, netting $109,000. Obviously we would like to go with the backup offer at this point.

My questions are:

1 - Does anyone know how conventional appraisals are coming in these days versus FHA appraisals?
2 - If the appraisal comes back at $111,000 again for the conventional as it did for the FHA, can I still sell it for more than that?

My thought was that if we went to $120K, and this buyer has 31K down, they'll mortgage 89K, which happens to be exactly 80% of the 111K appraisal amount.

Thanks in advance for any opinions on this transaction.

[Jon Holdman]

Sorry, but the HVCC rules that are now in effect prevent you from choosing the appraiser on conventional loans, too. I do recommend that borrowers meet with the appraiser with comps in hand if there is a possibility the appraiser would choose unfavorable comps. No guarantees, but maybe you can keep the appraiser from choosing two REOs and a short sale as comps.