What is an MAI appraisal?
MAI appraisals are among the most requested appraisals in the world of commercial real estate. MAI stands for Member of the Appraisal Institute, a trade organization that monitors appraisers and holds them to a higher standard than appraisers who are simply licensed and not owned by that organization. There are other commercial appraisal organizations active in the real estate world. However, MAI is the best known and therefore the most popular.
Technically, there is no such thing as an “MAI appraisal”. There are only evaluations performed by an appraiser who has completed MAI Assessment Institutes class offerings and holds this designation. However, it is often much easier to refer to the assessment itself as certified than to stick with technicalities.
An appraiser who has earned the MAI designation is qualified and experienced in performing residential and commercial properties. Many other appraisers only qualify for residential properties. At one point, lenders were likely to require an MAI-certified appraiser or a member of another business organization to do an appraisal. However, this has been illegal since 1989, as there is no federal regulation of these organizations. Still, certified appraisals can increase the chances of a favorable credit situation, as the lender will feel more comfortable. An MAI-certified appraisal offers lenders reliability that allows them to have confidence in their investment.
A business appraisal by an MAI certified appraiser can include many things. Generally, it will provide an overview of the community, neighborhood, and general area the property is located in, as well as a detailed description of the site and all the buildings it contains. A zoning analysis, a best and highest use analysis for the property, and an in-depth discussion of the property’s value from several different approaches will also be included. The appraiser can also recommend which valuation is the most appropriate in his opinion.
Appraisers tend to be conservative in their estimates. However, this does not mean that one receives a low rating. An MAI certified appraisal company takes responsibility if the appraisal is too high and the property cannot be sold at the recommended price. The company also takes responsibility if the price is too low and the property sells for too little money. Because of this, appraisers have a keen interest in making sure their estimates are in the mid-range. The sales that an appraiser places the most emphasis on will depend on the type of market. In a rising market, the emphasis will be on recent higher sales, and in a market on the decline, that emphasis will be on recent lower sales. A good appraiser is interested in giving clients the most accurate estimate possible.