Almost every disagreement about loan size is really a disagreement about value. An appraiser has three approaches available, leads with whichever fits the property, and the one chosen can move the number materially — so it is worth knowing which applies to your asset before you order the report.
The three approaches
Income capitalisation divides stabilised net operating income by a market capitalisation rate and leads on income-producing property. Sales comparison adjusts recent comparable sales and leads on owner-occupied and small assets. The cost approach reconstructs replacement cost less depreciation and matters most on special-purpose and new buildings.
Where values move
The capitalisation rate selected, whether a vacancy and management allowance was deducted, how much deferred maintenance was charged, and whether the comparables are genuinely comparable.
What to send with the order
A current rent roll, trailing twelve months of operating statements, the leases themselves and a capital-expenditure history. An appraiser working from a listing sheet will be conservative, and that conservatism is paid for in proceeds.
Our minimum loan is $200,000. We are a direct commercial lender working across the 43 states we serve, in business since 1998. We do not publish a rate for this product because the number depends on the file — call and we will quote the deal in front of us.
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