In the recent past, nearly 70% of all commercial appraisals were ordered by the banks that were going to fund the project. Now that banks are absent from the performing funding space, many developers are left with the responsibility of ordering an appraisal. Unfortunately, many of the appraisals they order and submit are simply unacceptable to 90% of our funding sources.
As a rule of thumb, if you don't have an appraisal, don't order one. Let the funder that has an interest in your project suggest one that you use. Otherwise, if you want to order your own appraisal, there are few bits of advice to follow:
1) Ask your mortgage broker who they use and have had success with. Be prepared to spend more than what the local guy quoted you. Your mortgage broker is always going to choose an appraiser he or she has had success with and gotten deals funded with, which is your primary objective.
2) If you want to shop yourself, make sure the appraiser is MAI certified. The acronym stands for Member of the Appraisal Institute. It's no simple achievement to get this accreditation. According the the Apraisal Institute, MAI appraisers must meet the following criteria for accreditation:
- Receive a passing grade on 11 examinations that reflect 380 hours of classroom instruction and that test the appraiser's knowledge of basic and advanced appraisal principles, procedures and applications; report writing; valuation analysis and standards of professional practice
- Receive a passing grade on a four-module, two-day comprehensive examination
- Hold an undergraduate degree from a four-year accredited educational institution
- Experience: Receive credit for 4,500 hours of experience, all of which must meet strict criteria
3) Anyone that is not MAI certified will perform your appraisal at about half the cost, but...it's a fool's errand because your finder is going to require that you get an MAI certified appraisal. So, you end up paying for two appraisals.
4) Try to find someone that is familiar with your area and project type. This enables them to do them faster and at a lower price.
While this is not the appropriate place to give recommendations, feel free to contact me at my office and I'll gladly steer you in the right direction.