Lender Q&A: Real Estate Appraisal and Total Project Size

Thursday, June 19, 2014 / Published in Featured News, Lender Q&A
Lender Q&A: Real Estate Appraisal and Total Project Size

Typically when considering a 504 project, the real estate appraisal is expected to equal the total project size.  For example, if the 504 project is to be used to purchase and/or renovate a piece of real estate at a price of $1,000,000, we would expect the appraisal to be $1,000,000. 

What options are available if the appraisal is less than $1,000,000?


Answer by Mike Taylor, Senior Vice Presiden

SBA will often accept a low appraisal in these situations provided that the appraised value is at least equal to the total financing amount of the 1st mortgage and the 504 portion of the project and the equity required (typically 10%) remains in place.  Again, assuming a $1,000,000 project, if the equity is 10% ($100,000) as long as the equity remains in place and the appraised value is $900,000 or more, the SBA will often accept the appraisal.

 

 

 

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