Zaxia AVM for CRE helps lenders get the right loan

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A previous article explained how the Zaxia AVM for CRE helps a business loan officer excel in today’s more complex regulated environment. This article will discuss in more detail how easily Zaxia AVM for CRE technology actually works to help the lender make the right loan. Imagine this often repeated scenario. The CRE investor negotiated with the broker and the seller to obtain a price for a commercial good, conditional on obtaining a loan over 15 years. The investor brings the sale / purchase agreement to the commercial lender for the property that has a loan value of less than $ 500,000, so an appraisal is not required, and an appraisal (a short-form appraisal) is sufficient for regulatory requirements.

The question for the lender is: “Is the negotiated price for 520k $ good?” Does a market analysis support this price? If the lender provides an 80% loan for $ 416,000 on the property, is there sufficient residual value in the CRE to support this loan and the costs associated with foreclosure? Difficult decision. The lender needs a reliable way to ensure the value of the collateral. But the borrower may be hesitant about the cost and time to complete a standard, comprehensive appraisal.

There is an alternative approach… Zaxia AVM technology. In a consultative fashion, the lender could sit down with the buyer and, in 10 or 15 minutes, answer simple questions in Zaxia AVM Technology’s online property survey. These survey questions relate to the type of property i.e. office or mixed-use or apartment and the address of the property. Then, the survey questions explore the quality of the building: offices, equipment, sanitary facilities, neighborhood and neighborhood.

Finally, there are some financial questions regarding rents and major construction expenses i.e. utilities, management, administration costs. The market value estimate is available almost instantly. If the estimate of the market value is higher than the negotiated price, the lender may have more confidence in the granting of the business loan. But, if the estimate of the market value is lower than the price, the lender and the potential buyer may want to dig deeper by requesting a Zaxia market report with 3 comparable sales and the detail of the revenue analysis.

In fact, the lender may want this report, which costs around $ 200 for frequent users, to document the rationale for loan approval. The report is not an assessment, but could easily serve as a basis for it. Appraisals for commercial properties are now requested 4 times more often than appraisals according to a July 2017 study by the Appraisal Institute. For the potential buyer, if the market price is lower than the agreed price, the buyer may want the Zaxia AVM Technology report to renegotiate the purchase price with the broker / seller because the lender cannot take over a loan. at 80% on the current purchase the price.

A victory for the lender (and the buyer)! The lender wins on many fronts by:

• Establish a consultative relationship with the potential buyer versus a traditional “yes / no” lending authority figure.

• Obtain assurance that CRE’s sale price supports an 80% loan based on Zaxia AVM Technology’s market analysis.

• The cliché reads: “Time is money. With Zaxia AVM technology, the analysis can be completed and the report produced in less than 30 minutes. Of course, the report needs to be read and analyzed, but agreement could be reached on the same day… a huge improvement over a CRE assessment which takes weeks and typically costs over $ 1,500.

• The rigor of the revenue analysis of Zaxia AVM technology and the 3 truly comparable CRE sales will be a quality improvement over assessments that can be done by almost anyone, resulting in an inferior, and requiring work product. usually much longer than a day.

• With the likelihood of the CRE appraisal limit rising to $ 1 million in loan value, lenders now have a strong and analytical CRE AVM alternative to questionable quality appraisals, namely: Zaxia AVM Technology

ZAXIA AVM technology for CRE is available now – Zaxia is open for business in Greater Boston. Until May 31st, use the code “NEREJ” for a free report.

Vaughan Hennum is a Market Analyst at Zaxia, Boston.

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