Before you pay for a commercial appraisal, confirm three things: that the lender is truly interested in the deal, that the property type and your situation fit what they finance, and that your timeline and the appraisal turnaround line up. An appraisal is real money, and ordering one before the deal is on solid footing is how borrowers waste it.
A commercial appraisal is one of the first real checks you write in a deal, and it's not small. So it's worth a pause before you order one. The question is not whether you'll eventually need an appraisal, you usually will, it's whether the deal is on solid enough footing that paying for one now is money well spent.
The most expensive mistake is paying for an appraisal before you know a lender truly wants the deal. An appraisal supports a loan that's already moving forward. If you've not confirmed real interest, a term sheet, or at least a clear read that the deal fits, you may be paying to appraise a loan no one is going to make.
Appraisals are often tied to a specific lender, and a lender will only proceed if the property type and your situation fit what they finance. Before you spend, make sure the lender understands what they're looking at: the property type, the income, the plan, and anything unusual about the deal. If the property doesn't fit their box, the appraisal doesn't change that, it just costs you.
This matters more with properties that fall outside standard lending. A mixed-use building, a special-use property, or a value-add plan needs to be understood before reports are ordered, not after.
If you're racing a closing date, the appraisal turnaround is one of the longest steps you don't fully control. Commercial appraisals take longer than residential, and a complex property takes longer than a simple one. Ordering early helps, but if the timeline and the turnaround don't line up, you want to know before you pay, not after.
Each of these is a version of the same idea. Spending on reports, appraisals, legal work, or due diligence makes sense once the path is clear, and it's wasted when it's spent before the deal is on solid footing. The point of a first conversation with a lender who knows what they're doing is to sort that out before the costs start stacking up.
If you're about to order an appraisal and want a read on whether the deal is ready for it, send the property and where things stand. We'll tell you whether it makes sense to spend now or what to confirm first.
Alan is Managing Partner at BluRidge Funding and has worked in mortgage and real estate finance since 1996, with commercial lending as a principal focus since 2003. He holds an economics degree from BYU and a law degree from the University of Utah, and is a founding board member and former President of the Utah Association of Mortgage Brokers. More about the team.
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