Definition:

A process of developing an opinion of value for real property. In order to be a valid appraisal, the authorized person will have a designation from a regulatory body governing the jurisdiction the appraiser operates within. Appraisals usually take one of three approaches to value: (i) cost approach, (ii) sales comparison approach and (iii) income approach.

loan appraisal definition

Example:

James is looking for a hard money loan to purchase new equipment for his business. To do so, he was wanting to use his rental property as collateral. For the lender to accept the rental property as collateral for the loan, they must first order an appraisal to determine the property value.

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