From The MSM Archives: Sizing Up Appraisals Experience Counts In The Self Storage Asset Class By Tammy LeRoy
Whether you are a buyer, seller, investor, or lender, one question is central to all parties involved in a self-storage sale: how much is the property worth? Every acquisition of a self-storage facility requires either an appraisal or underwriting of the acquisition to justify the purchase price being paid for the facility. An accurate assessment of value is vital to any deal.
Indeed, a critical inaccuracy in the valuation of a property can lead to costly setbacks or can even ruin a transaction. Even the best appraisers make mistakes, but owners can take steps to increase the likelihood of an accurate valuation when they gain a better understanding of the appraisal process.
Financing trends have changed rapidly over the past decade. The dramatic rise in the number of commercial mortgage-backed securities (CM BS)issued to borrowers has led to a substantial increase in the number of securitized real estate deals, and thus, a greater number of appraisals are performed. Where 25-year loans were once standard, the popularity of conduit loans with much shorter terms, along with robust market activity, has increased demand for fast yet accurate appraisals.