Could someone explain to me what "underwriting" means?
When I look through Commercial Real Estate job boards, I see "must have 2 years of underwriting experience" or something similar. What exactly is the underwriting process, and how do you get experience with underwriting to begin with?
[{"id": "cr09jl4", "text": "Underwriting is basically the process of valuing a property.  Looking at rents, tenant financials, historical p&amp;ls, market rents, comparable sales, cap rates, and cash flow analysis to come up with a market value.  It also involves the review of maintenance reports, title reports, and other details to make sure the reported/perceived condition of both the building and title are accurate.  You can either go work for a lender, find a research position at a brokerage firm, or go work for an investment firm to get experience.  The whole \"I need experience to get a job, but need a job to get experience\" conundrum is definitely at play here.  The answer?  probably try to find a spot at a brokerage firm or take an internship with an investment firm. ", "replies": [{"id": "cr0cfjz", "text": "I'm an underwriter at a bank.  You can look to portfolio management, Asset management,  or credit analyst positions to get a foot hold.  These are basically underwriting positions that review the loan ever year after the loan has been closed (on the lender side). It will lay all the ground work and can gain experience.  I used this root for myself. ", "replies": [], "depth": 2}, {"id": "cr0cx75", "text": "In this context, wouldn't you say \"underwriting\" is the same as \"due diligence\"?", "replies": [{"id": "cr0dodm", "text": "Not really.  I see some \"due diligence\" as part of the underwriting process, but there isn't a 100% overlap.  I don't consider anything regarding valuation as due diligence, and I don't consider full title reports, property inspections, and Alta surveys as underwriting. When im underwriting im only doing some limited review of existing materials, in anticipation that some issues may come up with a buyer that affect the purchase price..  Of course, its all semantics, really.  ", "replies": [], "depth": 3}], "depth": 2}, {"id": "hns1s2i", "text": "what is historical p&amp;ls?", "replies": [], "depth": 2}], "depth": 1}, {"id": "cr0cv8o", "text": "In the broadest sense, underwriters are the people responsible for evaluating and (when necessary) vetoing the deals brought in by the sales team.  This model is commonly found in insurance, lending, or any other field where sales success is measured primarily by volume of originations rather than quality of originations.\n\nSales people are expected to be *generally* familiar with their company's criteria, so the sales people do not waste time on lost causes.  Underwriters, on the other hand, are expected to be *intimately* familiar with the company's criteria, so they can veto the deals that are not suitable for the company.\n\nGood sales people and good underwriters can work together to find the best way to apply the criteria so the deal gets closed.  Often, though, sales and underwriting are at odds with each other.", "replies": [], "depth": 1}, {"id": "cr0p7oh", "text": "the process of conducting financial analysis on CRE. lenders use this as a means for determining whether the property in question can support debt, in addition to all the normal operating expenses. ", "replies": [], "depth": 1}, {"id": "cr1q947", "text": "The term comes from the insurance industry. The insurer would literally sign their name under the risk information.  [source](http://www.reddit.com/r/CommercialRealEstate/comments/352469/could_someone_explain_to_me_what_underwriting/)", "replies": [], "depth": 1}]