Appraisal Matters

I’m a consumer so I understand that commercial appraisals are expensive for many people. We are generally the most expensive item for a loan and certainly expensive for many estates.  It is a great leap of faith for someone to order an appraisal and not know if a "value will be made."

Again, like the last crisis, appraisers are at the center of the battle over the implosion of the mortgage industry.  Although the residential sector has had more press, the commercial sector has also been hit.  Years of "No Doc" and "Low Doc" loans have damaged the secondary market’s view of commercial backed investment vehicles.  With a skittish secondary market, lenders just did not have the money to spend.

Although I know borrowers would like to know if their number is OK for their loan before making a commitment, it is impossible to know.  There are too many variables to appraisal and the markets are changing so fast, we sometimes do not know until well after our inspection the final value conclusion.

It is also extremely important that we stay unbiased and our contract not be contingent on the final outcome.  Only through our independence can we avoid the current problems we are having in the mortgage industry.  Lending for more than the worth of the property is never a good idea.  It looked harmless to many for years because of the perception that the upward trend would last forever.  It never does!

Eileen