Will commercial lender insist on own appraiser?

Question

I'm in contract on a 7 unit deal. One lender who made an offer wants an appraisal by any certified appraiser. If I change my mind about this lender, would another commercial lender use the appraisal or would I have to pay for another appraisal?

Jessica Zolotorofe · Answer

The bank will likely require a new appraisal. They can reuse surveys and title, even environmental usually, but not usually appraisals.

Victor Patel · Answer

In my experience, most commercial lenders will require an appraisal that was ordered through their own process, even if another lender already has a completed appraisal.

The reason is that the lender needs to be the intended user of the appraisal so they can rely on it from a regulatory and liability standpoint. Some lenders may agree to transfer an appraisal if:

• The appraisal was ordered through an approved appraisal management company (AMC).
• The appraiser is on the new lender's approved panel.
• The original lender authorizes the transfer.
• The appraisal meets the new lender's underwriting requirements.

That said, I wouldn't assume it can be reused. Before ordering the appraisal, ask your lender:

• Who owns the appraisal?
• Can it be transferred if I switch lenders?
• Under what circumstances would another lender accept it?

A five-minute conversation now could save you another appraisal fee later.

Rodney Davis · Answer

Hi Dan, saw your comment on appraisals. what loan products do you offer?

Dan Wallace · Answer

To clarify, many lenders are very particular about the appraisal and the appraisal ordering process.

The primary governing regulation related to appraisal, FIRREA, provides that any regulated financial institution can use an appraisal of another regulated financial institution. I referenced this regulation regularly during my days at the FDIC. While FIRREA allows for the use of an appraisal between financial institutions, it is the financial institution's choice. I regularly use appraisals from my lender with another with or without an assignment from the appraiser.

Dan Wallace · Answer

To clarify, many lenders are very particular about the appraisal and the appraisal ordering process.

The primary governing regulation related to appraisal, FIRREA, provides that any regulated financial institution can use an appraisal of another regulated financial institution. I referenced this regulation regularly during my days at the FDIC. While FIRREA allows for the use of an appraisal between financial institutions, it is the financial institution's choice. I regularly use appraisals from my lender with another with or without an assignment from the appraiser.

Stephanie P. · Answer

@David De Luna

Most lenders want to order the appraisal from their preferred AMC to truly have a disinterested third party provide the valuation.  Too much room for hanky panky if the borrower just shows up with an appraisal.

Nick Schoch · Answer

I used to work at a large regional bank. We would never use an appraisal ordered by a client. Setting aside the bank's preference, it is against the law, specifically FIRREA.

From here (emphasis added):

Edit: I just re-read your question. We would often use appraisals ordered from other institutions. We would ask that institution to assign the appraisal to us. The other lender is generally willing to do this provided you paid for the appraisal.

David de Luna · Answer

Even if the appraisal is less that 30 days old?

Will commercial lender insist on own appraiser?

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