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» Purchase Price / Appraisal Price

Posted on 12/6/2004
Hard money loans are made based on the 'street value' or 'quick sale' value of property. Therefore, the actual purchase price is used as 'value' when determining the loan to value ratio. In the event that a borrower defaults on a loan, the property will need to be sold at a quick sale cost and the lender must protect their assets by using that number as a reasonable value in calculations. Appraised values are usually much higher than the actual purchase price on commerical and ivestment real estate transactions - after all, everyone is looking for a good deal.
Posted in Miscellaneous