During the month of May, Silver Hill Funding is waiving appraisal costs for small-balance commercial mortgages.* Small-business owners and investors can greatly benefit from these savings!
Since we are offering this great deal, we thought we would also give you some tips to remember about commercial real estate appraisals and further explain the appraisal process with Silver Hill.
It’s a fact: commercial appraisals cost more than the typical residential appraisal. While a residential appraisal may cost a few hundred dollars, commercial appraisals can easily cost a couple thousand dollars. If your client has never secured a commercial mortgage before, they could balk at the sight of this fee, making your life as a solution provider much more difficult.
In order to keep your client happy and the transaction on track, it’s crucial for you to manage expectations and overcome objections that may arise regarding the appraisal fee. Use these 3 lines of reasoning to educate your client and sidestep any potential hurdles down the road.
“Commercial properties are unique and require specially trained appraisers”
When you discuss the appraisal fee, remind your client that while residential homes are often cookie-cutter structures, their commercial property is wholly unique. Without easily-identifiable comparables, it follows that the appraisal is more difficult to complete. The challenging nature of commercial appraisals has much to do with the higher fee.
The fact that there are fewer commercial appraisers than residential appraisers also impacts costs. Commercial appraisers are required to be a certified general appraiser (which now requires a 4-year college degree), whereas residential appraisers need to have a residential certification (which requires only a 2-year college degree).
“Commercial appraisals take more time to complete”
Part of the reason commercial appraisals cost so much more than residential is because they take much longer to complete. The commercial appraisal process can take up to three weeks, while residential appraisals are typically completed in a few days.
Commercial appraisals also require extensive research that affects the completion time. Appraisers must complete a property inspection and additional research on the property.
“The documentation needed is far more extensive”
The property inspection is only a small portion of the documentation needed for appraisals. Appraisers must also research the property’s ownership, zoning records, demographic, and lifestyle information using similar data sources. In addition to this research, they gather comparable sales, market costs, and rental costs as well. All of this information is then analyzed to support the value through a capitalization rate that is also market determined and is based on required rates of return for that market based on the risk associated with the property type and location.
This documentation for commercial appraisals is generally about 100 pages long and is usually in the narrative form, meaning the appraiser is responsible for writing a full report on the property based on their research and analysis. Residential appraisals are completed by simply filling out a 10+- page form.
Silver Hill’s Appraisal Process
One way to avoid appraisal issues with your client is to work with a lender that focuses on providing a positive experience for all parties involved.
Completing appraisals with Silver Hill is a relatively simple, three-step process. We help you get the best price and fastest turnaround time for your borrower.
- Appraisal request.
Silver Hill has a contact list of nearly 1,000 appraisers nationwide to help you complete this process. You don’t have to worry about which appraiser would be best to work with because we take care of that for you. We contact appraisers in your borrower’s property area to determine who will be able to produce the highest quality appraisal affordably and in the shortest amount of time. The entire appraisal process takes between 2 to 3 weeks to complete.
- Review appraisal.
Once we have received the completed appraisal, A Silver Hill State Certified General Appraiser reads it in its entirety and then completes additional research to ensure all facts are correct. We are typically able to do this within one business day.
- Provide approval.
After reviewing the appraisal and conducting our research, we provide approval or request additional information. This is usually done within the same day of the review.
The property appraisal process is an integral part of any small-balance commercial mortgage transaction. If you manage your clients’ expectations and work with a lender that focuses on minimizing costs and expediting the turnaround time, you can put yourself in a better position to successfully close commercial deals.
Don’t forget – for this month only, Silver Hill is waiving any appraisal fee up to $3,000! Call us today to discuss a commercial transaction or use our mortgage payment calculator to price your deals.
*The maximum amount of this property appraisal fee waiver offer is $3,000. The borrower will be required to pay any remaining appraisal fee balance in excess of the maximum $3,000 amount at closing. Silver Hill will select the appraisal company for each commercial mortgage transaction. Offer ends May 31, 2017.