“The borrower is an experienced investor with a good relationship with his (regular) lender, a national bank,” says Balan. But finding a loan with proceeds high enough to refinance a maturing loan can be difficult in today’s environment, he says.

“We try to avoid having REOs as comps,” says Balan. Although the appraiser has to include REOs, without the help of real estate agents who know of properties which are about to close or have recently closed, ”you roll the dice and end up with comps which are all REOs that won’t support the value of the property,” says Balan.

“Ours is a fully-occupied, operating building in perfect condition with no deferred maintenance, and it is in a desirable location,” says Balan, referring to the Coral Way apartment. “Lots of distressed assets are in inferior locations and are of inferior quality,” he says. He doesn’t want his borrower’s property to be compared with others not of the same quality, says Balan.

If an appraiser is doing an appraisal of a building, he inspects a percentage of the units or the whole property, and knows what deferred maintenance is needed, says Balan, but he doesn’t have such detailed information for comps, so it is harder to compare the two properties, he says.