How Does a Hard Money Lender Value My Property?

[Corey Dutton]

When making a loan, a bank and hard money lender have different opinions when it comes to determining the value of the property. The appraised value is really not that important to a private lender. Instead, a hard money lender would use the value of the home as if they were to sell the home in 30-90 days. This is often called, “Fire Sale Value.” What’s more important to hard money lender is the liquidity of the property if the borrower defaults.

Banks will usually go with a standard appraised value. In the current climate of course, most banks are lending on purchase price and using that as the “value.” What’s more important to the bank is the ability of the borrower to pay back the loan, not the liquidity of the property.

Any comments on this topic? Please share.