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The Importance of Appraisals in Private Lending

Appraisal Nation

Appraisals are a crucial step in the investment real estate industry and most private and hard money lenders require investors to have a completed appraisal done, before moving forward to underwriting and closing.

To ensure all our customers, including lenders, brokers and investors, receive the best customer service and quick turn times with their appraisal ordering, Bridge Loan Network has partnered with the nationwide appraisal management company, Appraisal Nation. Bridge Loan Network customers can now order appraisal reports directly in their lending portal and then have the completed report automatically uploaded into the system.

Before discussing more about how our integration with Appraisal Nation is a valuable add-on for our customers, it’s important to understand why appraisals are a vital step in the lending process.

There are three main sections of the appraisal report we’re going to discuss in this article, the As-Is Value, the After-Repair Value, and Comparable Properties, to help you gain a better understanding of the reports for yourself and your customers.

The As-Is Value

When an appraisal is being completed the appraiser examines the properties As-Is Value, which is the value the property is worth in its standing condition now, with no renovations completed. This value is an important factor for the lenders and may impact their decision to close the loan. If a property’s value is low, for instance, $10k, then some lender’s may choose to not lend on that property as it is below their minimum loan amount.

The After-Repair Value

If the property has any type of rehab work needed, then the appraiser will also take into consideration the borrower’s rehab budget to determine the After-Repair Value (ARV) of the property. The ARV on the appraisal will tell the lender what the distressed property is expected to be worth after all the renovations on the rehab list are completed.  ARV is often valued by both lenders and borrowers to ensure the project is lucrative enough for all parties, and each will see a return-on-investment.

Comparable Properties

Comparable properties are another aspect of an appraisal that is crucial to evaluating the value of the property in both its As-Is state and its After-Repair Value state. The appraiser will look at similar properties in the immediate surrounding area and compare the value of those properties to the value of the subject property. If there are no similar properties in the surrounding area, this could dictate that the property is in a rural area, which some private lenders tend to avoid.

Overall, in the private money industry, time is one of the most valuable assets. Our integration with Appraisal Nation saves your company time by streamlining the entire appraisal process. Simply place an order in the Bridge Loan Network software and Appraisal Nation will take care of the rest. Utilizing their nationwide network, your request will be assigned to a certified appraiser promptly.

After the appraisal is scheduled, Appraisal Nation’s Client Service team will continue to work with the appraiser until the report on the property is finished. Once the report is complete, Appraisal Nation has their in-house appraisers review the to ensure all fields are complete, and then the report is uploaded into the Bridge Loan Network software. The Bridge Loan Network software keeps all loan documents in one secure location for all members of the transaction, streamlining the lending process.