Appraised value
Encyclopedia
An appraised value or mortgage valuation (Australia
) pertains to the assessed value of real property
in the opinion of a qualified appraiser or valuer. It is usually used as a pre-qualification
& risk-based pricing
factor related to the issuance of mortgage loan
s by a financial institution
.
When obtaining a mortgage
the funding lender relies on the standardized valuation methods of an appraiser to assess a monetary value for the specific piece of real property on which a loan will be secured (e.g. a residence). The lender will then justify the loan amount
(and other risk-based pricing) factors as a percentage of the appraised value of the property.
Appraised values can also be made after a property sale. For example, home owners wishing to gain access to their increased equity
in their home may obtain a mortgage valuation to prove its value has risen and thus justify increasing the amount of their mortgage. Also, the various states of Australia
each have a Valuer-General's Department, which regularly assess land values in all municipalities and shires for the purpose of issuing property tax
notices.
A low appraised value will affect a buyer's ability to purchase a property. This is because the loan amount would seem too high with respect to the value. Unless the buyer can come up with the difference, the buyer will unlikely be able to qualify for the loan.
appraisal value is the value of the house at the current situation.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
) pertains to the assessed value of real property
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
in the opinion of a qualified appraiser or valuer. It is usually used as a pre-qualification
Pre-qualification
Pre-qualification is a term of art in retail finance, and means that a loan officer has taken some information from the borrower, and made a tentative ....
& risk-based pricing
Risk-based pricing
Risk-based pricing is a methodology adopted by many lenders in the mortgage and financial services industries. It has been in use for many years as lenders try to measure loan risk in terms of interest rates and other fees...
factor related to the issuance of mortgage loan
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
s by a financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
.
When obtaining a mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
the funding lender relies on the standardized valuation methods of an appraiser to assess a monetary value for the specific piece of real property on which a loan will be secured (e.g. a residence). The lender will then justify the loan amount
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
(and other risk-based pricing) factors as a percentage of the appraised value of the property.
Appraised values can also be made after a property sale. For example, home owners wishing to gain access to their increased equity
Ownership equity
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
in their home may obtain a mortgage valuation to prove its value has risen and thus justify increasing the amount of their mortgage. Also, the various states of Australia
States and territories of Australia
The Commonwealth of Australia is a union of six states and various territories. The Australian mainland is made up of five states and three territories, with the sixth state of Tasmania being made up of islands. In addition there are six island territories, known as external territories, and a...
each have a Valuer-General's Department, which regularly assess land values in all municipalities and shires for the purpose of issuing property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
notices.
A low appraised value will affect a buyer's ability to purchase a property. This is because the loan amount would seem too high with respect to the value. Unless the buyer can come up with the difference, the buyer will unlikely be able to qualify for the loan.
Appraisal fraud
Fraud in appraisal happens during both upturn and downturn markets. When a homeowner is looking to refinance their home, the appraiser is sometimes under pressure to overvalue the home to make the refinancing more attractive.See also
- Real estate appraisalReal estate appraisalReal estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property's Market Value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently...
appraisal value is the value of the house at the current situation.