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 do not belong to such an 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 a “MAI assessment.” There are only appraisals performed by an appraiser who has completed 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 some point, lenders may require an MAI-certified appraiser or a member of another business organization to perform 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, since the lender will feel more comfortable. An MAI-certified appraisal offers lenders the reliability that allows them to feel confident in their investment.
A commercial 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 any 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 approaches. The appraiser may also make a recommendation as to which valuation is the most appropriate in their 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 is sold for too little money. Because of this, appraisers have a vested interest in making sure their estimates are in the middle range. The sales 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.
