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Reporting for duty
Third-party reports required during a commercial transaction will vary by lender. Most lenders require an appraisal. But unlike residential appraisals, most commercial lenders have their own set of guidelines for the appraiser to follow, and most will also have an approved list of appraisers to use. A property inspection may also be required to tell the lender the property’s condition and to assign an approximate cost to cure any maintenance items. The results of the property inspection may indicate the need for further follow-up by contractors who specialize in certain areas. For example, if the property inspection cites a roof in poor condition, a roofing contractor may be required to provide an opinion on the roof.
In addition to appraisals and property inspections, an environmental report may also be required. Many lenders who finance less-risky property types, such as office, retail and multifamily, are now opting for environmental insurance over the often more-expensive environmental reports.
Third-party reports can generally be obtained during the underwriting and processing stage. These reports are incredibly important to the final loan decision and simply take some time to complete. Loan processors will usually tell you that the common timing is three to four weeks, but it can actually range from two to six.
One of the most-important things to keep in mind during the loan process is that you should have a realistic expectation of timing. When entering into the loan process, you can make things smoother if you allow some extra timing to accommodate for delays. Once in the process, take extra measures to avoid some of the more-common delays. As with a thorough prequalification, these are steps a mortgage broker should take to ensure this stage of the process is as smooth and as efficient as possible for your borrower.
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