Commercial Mortgage Appraisal
“Commercial Mortgage Appraisal Watch Outs And Considerations”
Commercial mortgage appraisals are a critical part of getting a commercial property in place.
And depending on the scope of a given commercial property appraisal and the activity or demand for commercial appraisals in a given area during a given time period, the completion of a commercial property appraisal can take several weeks or even months to complete and can add considerable time to the commercial mortgage application process.
A commercial real estate appraisal can also come with a significant cost to complete, so time and money are both going to potentially come into play.
As a result, there are a number of watch outs and considerations for anyone applying for a commercial mortgage.
First of all, most mortgage lenders will have their own accepted or approved list of commercial property appraisers. Any appraisal presented to them that was completed by an accredited or non accredited appraiser from outside their list will not be considered.
This creates a bit of dilemma in that some property owners, knowing the amount of time that it can take to get a commercial appraisal completed, will want to get an appraiser working on their property prior to even applying for financing.
This is truly a risk in that if the appraiser selected is not on the approved list of the lender you’re trying to work with, the appraisal may have to be redone which is going to take time and money. That being said, if you have a good idea of the lender or lenders that you are likely going to be working with or applying with, you can do some checking and find the appraisers that are approved on all or most of the targeted lenders’ lists.
A second challenge with commercial mortgage appraisals is that they are going to have to be made out directly to your targeted lender, even though you are paying for them. As a result, the commercial lender will get a copy of the appraisal, but you may not. This is something you will want to discuss in advance with any lender you want to apply with if you will want a copy of the appraisal for your own use and potentially have one or more copies of the appraisal sent on to other lenders if your financing request is not approved.
The lender may also have an agreement with their approved appraisers that any appraiser they receive from a given appraiser cannot be re issued for a period of time, say 60 days. This restricts the amount of shopping you can do with a completed commercial appraisal.
Third, it can be a good idea to find out how busy the appraisers in your area are at a given time. There can be periods of time when commercial activity is high that it may take a month or more before an appraiser can even start working on your file. Because there are significantly fewer certified commercial appraisers than residential, the demand for appraisal services can outstrip the available supply, and when you further limit your choices to lender approved appraisers, there can be a considerable back log in getting the work completed.
Of all the aspects that can go into a commercial mortgage, the commercial real estate appraisal can be the most difficult to accomplish and can add the most time to the overall process, which speaks to the need to closely manage this requirement, even before you formally apply for commercial property financing.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel