Aside From Financial Ratios, What Are the Other Important Considerations for Lenders in Evaluating a Commercial Real Estate Loan?
A lender will look at a wide range of other factors in evaluating a potential loan, including: (a) the credit and net worth of the borrower and any guarantors; (b) the location and marketability of the collateral, including neighboring uses; (c) the quality of the tenants; (d) length of lease terms and the legal rights and remedies set forth in the written leases; (e) the type of use and potential vacancy rates associated with that use; (f) the size of the requested loan; and (g) the age and quality of the improvements (e.g. Class A office space may be preferred over Class B office space). 5. What Are the Primary Methods Used by Professional Appraisers in Appraising the Value of Commercial Real Estate? There are three principal methods used for appraising real estate: Sales Comparison Approach. Using this approach, the appraiser reviews the price paid recently for similar properties, but makes adjustments for positive and negative variances between properties. This approach does not wo
