Is the Bank (SBA) Valuation usually on point?

searcher profile

October 29, 2023

by a searcher in Petaluma, CA, USA

The bank's valuation: is it usually on point or does it tend to come in higher (or lower) than the proposed deal terms?

I'm wondering what one should expect.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Are you referring to a real estate appraisal or a business valuation? I always tell people the best example of value is what two individuals are willing to sell and buy a business or property at and for the most part we see the majority of business valuations and most appraisals come in right at the purchase price. However, if you are over-paying and the market data does not support the value, it could certainly come in lower. Usually if there is a believed risk the business or property will not value out that concern will come up during underwriting.

It is rare to get a real estate appraisal that comes back more for the purchase price. Even if there is some additional value, it is rare real estate appraisers want to take the risk of over-valuing an asset due to all of the regulatory compliance they have to meet. However, I have seen business valuations more often than traditional real estate appraisals come in for more if someone really is getting a good price on the real estate. I hope this helps. If you have additional questions I am more than happy to talk through them. Good luck.
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Reply by a lender
from Washington University in St. Louis in St. Louis, MO, USA
Business valuations for my buyers have been higher than the contracted sales price frequently. If the valuation is below the contracted price, there are a few workarounds. redacted
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