AMA - Surprise Appraisal

Today’s question comes from Marc in Montreal.

I recently got an as-built appraisal report that I wish to use for financing for a new apartment complex in a semi-rural location with lots of industry and extremely low vacancy.  The appraiser is quoting a higher CAP Rate than I was expecting, citing the following.  First, he is using comparables a couple of hundred miles away, in the same province.  Second, he is stating that the Bank of Canada has not lowered interest rates, when multifamily lends on a more floating bond rate.  Third, his only comparable in the same market appears to be an inferior product with less amenities.  Fourth, he is saying that the site is not serviced, but I can tell you that the municipal government has stated that servicing will come in time for the construction.  What kind of arguments can I make to gently push the appraiser to a more favourable CAP Rate?"

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Host: Victor Menasce

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