The appraiser that you hire for your commercial investments before you buy can have a great impact on the amount of money you spend and your chances of getting funding from a lender. Most lenders will not accept just any appraiser. So, if you get an appraisal with an appraiser that a lender does not accept, you have just wasted your time and money, and you are no closer to getting the property you want.

Let?s look at what makes a qualified appraiser, and who it is you want to hire to evaluate your potential investment.

It is common practice for a lender to appoint the appraiser that is to appraise the property in question. This practice is in place because there are dishonest buyers who work with certain appraisers that will inflate the property?s true value. This, in turn, allows the buyer to borrow more money than what a lender would normally allow, thus increasing the lender?s risk.

Inflating a property?s true market value is surprisingly easy because appraisals are simply guesstimates of a property?s true market value. They are interpretations based on the surrounding property and selected criteria. An appraisal can be ?fixed? according to a person?s interest. That is why the two parties must not have any prior dealings or common interest in the subject property.

A very widely used and accepted type of appraiser is one that is certified by the American Institute of Real Estate Appraisers. They are members, making them M.A.I. designated. Most lenders will require that you use only an MAI appraiser. These MAI appraisers have gone through intense study, years of practice, and have had to perform under tight supervision while appraising many different properties.

Most MAI appraisers will not conspire with a borrower because there is too much to lose and too much invested in their practice. For this reason, most lenders will accept MAI appraisals regardless of whether or not they know the appraiser personally. For the most part, lenders will have trusted appraisers that they work with all the time, and will require that you use only their appraisers. Be sure to get clarification on this issue before you hire an appraiser because you do not want to pay for two!

An MAI appraisal costs more than a non-MAI appraisal because of the added expertise and experience of the appraiser. In fact, the cost for a single appraisal can run from $2,000-$5,000, or two to three times the cost of a fee appraiser. Be sure to include this in your total cost of purchasing the property so you are prepared to cover the cost. If you have been in the commercial real estate business for a while, you may have a few lenders and appraisers that you work with often. They may even be considered as part of your team. This can greatly increase your productivity because you have professionals at your fingertips to get many properties handled quickly, if necessary.

You can trust MAI appraisers to perform an accurate evaluation of your prospect property. With this appraisal, you will be able to get the proper amount of money loaned on the property and not come out short.

It is always a good idea to research your appraiser and view some of the work that he or she has done. The appraiser and the appraisals should be of the utmost professional quality because so much is riding on their appraisal. Even if it costs you more money, always use an MAI appraiser to avoid problems with the lender and unnecessary expenditures.

Posted by Peg Finegan on December 13, 2008 at 12:00 AM

About Peg Finegan
Peg Finegan is affliated with Jack Gaughen Realtor ERA, which is located in Camp Hill, PA. For further assistance please use the contact information located on the right.




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