Whether the financing is for a purchase, bridge loan, or refinancing, appraisals are necessary for lenders to confirm that the market value or purchase price of the property is accurate. Appraisals also help lenders determine if there are problems with the property that need to be factored into the loan amount or could affect the success of the transaction.
Appraisals for commercial properties are expensive. They are ordered by the Lender, but paid for by the Borrower. Since the borrower does not want to have to pay for more than one appraisal, most loan applicants will wait until the lender has issued an acceptable term sheet before paying for the appraisal.