The Need to Determine Appraised Value in Today’s Market
Many lenders are re-appraising properties that secure the loans in their portfolios. In today’s market, relying solely on comparable properties to determine value is a mistake. Whether your property loan is being re-appraised or you are applying for a new loan, understanding the information your bank needs may expedite the appraisal and review process.
A lender will have more confidence in a property value estimate knowing the comparable data has been verified by a direct participant of the transaction. Finding sale comparables in today’s market is difficult. Some comparables don’t make sense, and using these sales without proper analysis could cause costly valuation mistakes.
The appraiser should confirm each sale with someone who has firsthand knowledge of the transaction, such as the listing or selling broker or the buyer and/or seller. Buyer and seller motivations play a key role in establishing the sale price.
In addition to the standard information included in an appraisal, other important factors include offered concessions, the type of financing terms and the length of time the property has been on the market. And it’s always a good idea to obtain the broker’s, or buyer’s/seller’s, opinion of the property for information that might not be obvious.