|>Hotel loan appraisal question
|Posted by: Mike T. Jan 29 2004, 06:26 PM
|I had a meeting last week with a bank. my parents own a small hotel and want to refinance. The loan is currently at 8% and I think we can do much better. Business has been slow but it is picking up. We have an appraisal from when we had the first loan and we only need half of the value amount to pay off the loan and do some repairs. The bank wants a new appraisal but they say it will be at least $4k to do one. Why can’t they do the loan with the one that we have is only 4 years old and is not like we are asking more than what the hotel is worth?
What do you think?
|Posted by: loanuniverse Jan 29 2004, 07:20 PM
There are a couple of reasons why the lender might be requiring an updated appraisal. You have to understand that banks are very regulated entities, and quality/standards/acceptability of appraisals are one of the aspects of lending that the regulators control. While the lender is allowed some discretion, an appraisal that is four years old specially in the hospitality industry needs to be updated.
Within the last year, I have seen a couple of loans for Hotels/Motels and the values of these properties had gone down substantially “somewhere in the neighborhood of 50%”. Granted I was comparing a 1997 valuation to a 2003 valuation, but something similar could have happened to this property and the bank wants to make sure it won’t. If a new loan was given based on the old valuations at 75% of value, the bank would have lent more money than the property was worth.
You did not mention how big the loan was. Some lenders can waive the appraisal requirement if the loan is under $250,000 or $500,000. You can try other banks to see if they are willing to do a loan without an appraisal, but I doubt that you will find any takers.
Hope this helps
|Posted by: commfunder Feb 5 2004, 03:51 PM
|The need for a current appraisal is valid. 4k is fairly standerd. 1st Fidelity Funding offers a low interest rate loan for qualifying areas. Hotels are tricky depending on location can be done at reasonable rates. I’m a direct lender’s agent. Please email me with abrief summary and contact info if you would like assistance.