What is a MAI assessment?
MAI appraisals are among the most sought after appraisals in the world of commercial real estate. MAI stands for Member of the Appraisal Institute, a trade organization that oversees appraisers and holds them to a higher standard than appraisers who are simply licensed and not affiliated with that organization. There are other commercial appraisal organizations active in the world of real estate. However, MAI is the best known and therefore the most popular.
Technically, there is no such thing as a “MAI assessment.” There are only appraisals performed by an appraiser who has completed the MAI Appraisal Institutes class offerings and has this designation. However, it is often much easier to refer to the appraisal itself as certified than to stick to technicalities.
An appraiser who has earned the MAI designation is qualified and experienced in performing residential and commercial properties. Many other appraisers are only qualified for residential properties. At any given time, lenders will likely require that an appraisal be performed by a MAI-certified appraiser or a member of another trade organization. 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, since the lender will feel more comfortable. An MAI-certified appraisal offers lenders reliability that allows them to trust their investment.
A business appraisal by a MAI Certified Appraiser can include many things. In general, it will provide an overview of the community, neighborhood, and general area in which the property is located, as well as a detailed description of the site and all buildings on it. Also included will be a zoning analysis, an analysis of the highest and best use of the property, and a detailed discussion of property value from several different angles. The appraiser can also make a recommendation on which valuation is the most appropriate in your opinion.
Appraisers tend to be conservative in their estimates. However, this does not mean that one will receive a low evaluation. A MAI certified appraisal company takes responsibility if the appraisal is too high and the property cannot be sold for 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 vested interest in making sure that their estimates are in the mid-range. The sales that an appraiser places more emphasis on will depend on the type of market. In a rising market, the emphasis will be on higher recent sales, and in a falling market, that emphasis will be on lower recent sales. A good appraiser is interested in giving clients the most accurate estimate possible.