What is a MAI assessment?

MAI appraisals are among the most sought-after appraisals in the world of commercial real estate. MAI stands for Member of the Appraisal Institute, a trade organization that monitors appraisers and raises them to a higher standard than appraisers who are merely licensed and not affiliated with such an organization. There are other appraisal organizations operating in the real estate world. However, MAI is the best known and therefore the most popular.

Technically there is no such thing as a “MAI rating”. Appraisals will only be conducted by an appraiser who has completed the class offerings of the MAI Appraisal Institute and holds that designation. However, it is often much easier to call the report itself certified than to stick to formalities.

A valuer who has earned the MAI designation is qualified and experienced in the performance of residential and commercial real estate. Many other appraisers are only qualified for residential real estate. At some point, lenders likely required that an appraisal be conducted by a MAI-certified appraiser or a member of another trade organization. However, this has been unlawful since 1989 as there is no federal regulation of these organizations. Nevertheless, certified appraisals can increase the chances of a favorable credit situation because the lender feels more comfortable. A MAI certified rating provides lenders with a level of reliability that allows them to feel confident in their investment.

A commercial evaluation by a MAI-certified appraiser can include many things. In general, it provides an overview of the community, neighborhood, and general area where the property is located, as well as a detailed description of the site and any buildings within it. A zoning analysis, an analysis of the highest and best use of the property, and an in-depth discussion of property value from several different approaches will also be included. The appraiser can also make a recommendation as to which appraisal they think is most appropriate.

Appraisers tend to be conservative in their estimates. However, this does not mean that you get a bad rating. A MAI-certified appraisal agency will assume liability if the appraisal is overvalued and the property cannot be sold at the recommended price. The company is also liable if the price is too low and the property is sold for too little money. For this reason, appraisers have a vested interest in ensuring that their estimates are in the mid-range. Which sales an appraiser places the most emphasis on depends on the nature of the market. In a rising market, the emphasis will be on higher recent sales, and in a falling market, this emphasis will be on lower recent sales. A good appraiser is interested in giving their clients the most accurate estimate possible.