What Are You Paying for an Appraisal on Small Commercial Multifamily?

11 Replies

How much do you typically pay for an appraisal fee on a small (less than 10) commercial multifamily property?

I paid $500 recently for an independent appraisal of a 4-family.

I just paid $800 for an "Inside valuation" on my 5-plex, and have been quoted $2800 for my 24 unit. 

Right on. Thanks @Brandon Turner ...lender indicated it would be $600+...just want to make sure I am in the same ballpark.

p.s. investing in multifamily is hard ;). Cheers

That seems about correct. When I was going through the process of purchasing my Duplex in Fremont, Ohio the appraisal fee was initially quoted at $350. About a week later the appraisal company contacted my lender and stated that they couldn't find any comparable properties in the area and would need to require an additional $300 to continue the appraisal. I think I got scammed... haha

Welcome to BP. 

If it's a four unit or less, it should be $350 or less, if more than 5 units, $800 or less, if commercial $900 or more. 

Hope it helps.

2-4 units typically run $350 to $500 for us.

After 4 units they get a bit more expensive.   Just got 3 quotes for 24 unit development including 3 re-inspections for draws.  Middle quote was $3200. 

One note: It can be difficult for appraisers to certify multi-unit properties in some areas. In my farm locations, most of the multifamily units never cross the MLS and rarely change hands. Because of this, it is extremely tough to find two verifiable sources of information... I have yet to find an appraiser willing to give an income analysis more weight than market comparable...

I couldn't give you a range on an appraisal fee for projects less than 10 units. I can tell you we are currently appraising a 24-unit for a $6,500 fee, but that is through HUD financing. Typically, I see fees range from $4,000 to $7,000, with the tendency around $5,000. This is for projects typically with 100 units or more.

This is why there is a certain flow to deals. You back load the really expensive stuff LAST after you have verified numbers and the inspection. No point in dropping bank on an expensive appraisal if the numbers or inspection doesn't check out and the seller doesn't want to reduce the price or alter terms.

Make sure the lender is required to give you a copy of the appraisal. Sometimes the lenders will not give it to you even though you paid for it they ordered it. They do this to try and prevent lender hopping to close on the property. If the lender feels that appraiser is off for market vacancy averages, market rents, building expenses, etc. from the appraisers initial draft  then they have a discussion and sometimes the appraiser will change their report.

Every little nuance in a commercial appraisal is important because it affects LTV on the loan and under writeable cash flow. The prices mentioned are pretty normal. Make sure if you can to get a local appraiser to the area to do the report. They will usually have connections to off market data and get an more accurate report versus a national company who dabbles in that market from time to time with appraising.

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