What is Appraised Value?§
The term appraised value signifies a professional judgment regarding the present market value of a property. To determine this value, property appraisers scrutinize recently sold comparable properties in the vicinity and use that data to estimate the worth of the targeted property.
The Role of Appraised Value in Real Estate Transactions§
When home buyers seek a mortgage, the lending institution needs to ascertain the property’s current value before advancing the loan. The mortgage company will request that the buyer conduct an appraisal. This appraised value generally sets the maximum amount the lender is willing to finance for the home purchase.
Impact on Home Buyers§
If a home buyer wishes to borrow more than what the mortgage company offers based on the appraised value, they must either discover alternate funding sources or reconsider the purchase entirely. This ensures that the lending institution’s loan-to-value ratio remains within acceptable limits, minimizing financial risk.
Understanding real estate and the notion of appraised value is crucial for anyone navigating the property market, whether as a buyer, seller, or investor. Accurate appraisals lay the foundation for informed financial decisions and successful investments.
Related Terms: market value, property assessment, mortgage loan, real estate appraisal.
