Avatar's Blog
» Lowball Your Appraisal and You Will Not Be Sorry
If you are seeking a hard money commecial bridge refinance loan, you may have already ordered an appraisal on your property to get a sense of its current value and determine what you are able to borrow against it. This is a good idea. However, it is important to note that MAI appraisers will take in to account that the seller has the leisure to wait for the 'right' borrower to come along and love the property, need it for business, or what-have-you.
Since your property will serve as collateral for a loan, in the event of defaujlt on the loan, the property will need to be sold off quickly to recoup the sum of the loan. In that event, the lender will have to sell off the property in 1- 4months. This will yield a lower value than what an MAI appraiser may assign to your property.
If you are seeking a hard money refi loan, low-ball the appraised value of your property to account for the quick-sale factor. Then multiply by 65%. This is the sum you are likely to get from the lender. Reduce that sum by the payoff amount of your first lien mortgage, as Avatar will need to fund in the first lien position. Contact any second or third lien holders to be sure they are willing and ready to subordinate to a larger first lien loan. This can save time and dissapointment down the road. Get the facts you need before making due diligence down payments and you will be pleased with your hard money loan..
