When buying or refinancing a commercial property or income producing real estate your lender will require an appraisal by a professional appraiser or AACI.
The Financing Appraisal Process
The bank, credit union or other lender will require an appraisal of your commercial property in order to provide a loan or mortgage against the property.
In the past, the appraiser was typically retained by the lender similar to the residential mortgage process.
Now however, property owners generally retain their own appraiser and the appraisal report is then shared with the lender.
The lender will not typically lend on the entire appraised value of the property and standard loan to values exist and are generally in the 75% range.
The Refinance Appraisal
The refinancing appraiser will analyze the local marketplace, the forces impacting the specific asset type, perform an interior and exterior inspection of the property, provide some commentary and insight on the condition of the property, its efficiency, the highest and best use of the property and then apply the three approaches to value: the cost approach, the income approach and the direct comparison approach, to arrive at a single, reconciled point in time estimate of value.
Help the Appraiser
The commercial appraisal is a very lengthy process and each property has its unique challenges. You can assume that the standard mortgage financing appraisal will take between three and five weeks so ensure you allow enough time during your closing period to account for the lengthy appraisal timeline.
Additionally, provide the appraiser with as much information as possible, financial statements including the income and expenses associated with the property, site plans, floor plans, renovation and recent improvement schedules, leases, environmental and building condition assessments, tax bill and any other information that the appraiser requests.
Not only does this information paint a better picture of the property, it also helps to speed up the process which gets the money to you faster.
Contact Nicro today to discuss your commercial appraisal needs and talk to one of our licensed and insured AACIs to obtain a quote and find out more about our services.
Given today’s ultra low interest rate environment there has never been a better time to refinance your property and engage the services of a commercial appraiser.