Can a commercial building be financed at a higher price that the appraised value?

[Jorge Leon]

My father has a commercial building in a very busy street in Chicago. A church is currently leasing it for $5,000 a month. The church people asked my dad if he would sell them the building. They would have to finance.

If my father's asking price is higher than the appraised value, will the lender still approve the loan? Or would we have to adjust the price to the appraised value?

Would the buyers need to put 20% down since it is not a residential building?

Would real estate agents be needed if the they come to an agreement in terms of the price, or would we just be dealing with the mortgage lender?

Looking for any input, thanks.

[Bill B.]

You don’t need the real estate agents if your dad is happy with the price and isn’t worried about getting top dollar from his existing tenants. 

Lending MAY be hard for the church to get. In my VAST experience (2 deals) involving churches they ended up fundraising and borrowing from their parishioners. No bank wants to be in the news for foreclosing on a bank. 

You can sell for over the appraised value. BUT. Your buyers would need to bring 20-25% (or whatever the lender allows) of the appraised value and 100% of the sale price over the appraised value. 

IE: Appraises for $1,000,000 and selling for $1.2m. Means 20-25% of the $1m Plus the $200k over appraisal for a total of $400-$450k downpayment plus a mortgage for $750-$800k. 

If your dad doesn’t need the lump sum he could offer to finance the remainder after a substantial downpayment. Then you don’t need the realtors or the appraiser. But both he and the church have to be confident at their guesses of the value.