Appraisal Process for Eco Express
The appraisal is an essential portion of the project to be approved for financing. A bank will require this to ensure that the final amount financed is well below actual value when the project is completed, and that the project will have sufficient cash flow to easily cover debt payments. The appraisal is ordered by the bank so that it is neutral and unbiased. Unfortunately some appraisers chosen by the bank have no experience with car washes, and can undervalue them. Luckily one of the key pieces of information the appraiser will use are the financial proforma and comparable site data provided by the car wash equipment supplier. If the estimates the appraiser determines are substantially out of line with the proforma, it can help him know to ask for more data to substantiate the project cost, instead of just rendering a low value. The appraisal will delve into the land, building and equipment costs, nearby competition, and all other factors related to the expected financial performance of the site. The end product is very detailed, and will typically have a value as built, value in initial operation and value after reaching steady state operations.
In our case, the bank did not have an appraiser with substantial car wash experience, so we were able to give them a list of qualified and experienced appraisers. One was selected and after about four weeks the appraisal was completed, with the appraiser’s financial projections coming out very close to ours, and the bank satisfied with the appraised values.