Avatar's Blog
» Building a Hard Money Loan Package - Appraisal
Appraisals of the property you wish to collateralize for a hard money loan are always welcome as part of your loan request package. However, they are not required. If you have a recent written appraisal, you can email or fax it in to support your loan request.
The purposes of the appraisal is, of course, to establish and validate the value of the collatera property. Note that in the event of a purchase, the value of property will be the sum you are paying for the property, not the "retail appraised value".
During the due diligence process, another appraisal of the property will be conducted - even if an appraisal was just completed. In fact, the term 'appraisal' is a mis-nomer for what is accomplished during due diligence. What happens is this:
A licensed real estate appraiser is hired to provide consulting services to the lender. She or he travels to the subject property for a personal inspection, reviews any existing appraisals, tax records, and determines what the local real estate market looks like, the optional uses for the property, and the likely number of potential buyers for the property. This consultation service yields a 'quick-sale' value of the collateral real estate that may be at or somewhat below the retail appraised value of the property.
