Obtaining a hard money loan for the purchase of a property usually comes with the contingency of getting an appraisal. Most lenders will not complete the process without one. A loan from a private lender differs from a direct loan from a bank loan. Private lenders may have a licensed professional on staff that conducts their appraisals or you can recruit one on your own. They want confirmation that their investment of up to 65% of the property’s after-repair value (ARV) is secure.

What an Appraisal Consists Of

  • Market comparisons of similar properties
  • The state the property is in
  • The locality of the property
  • The demographics of the location

Keep in mind that the appraiser will not be interested in the furnishings of the property or anything that isn’t structural. They are primarily looking for its visual impact and the ability to accommodate. The aesthetics and reputation of the neighborhood also have an impact on their assessment.

Seeking your own licensed professional may provide you with the added security that you are purchasing the property at market value or below. The Appraisal Institute search tool is ideal for finding an appraiser with the right credentials.

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