Is there a difference between the market value & the loan value or are they the same thing?
Update:Topic/primary question is the main focus. Secondary rephrasing: Are the market value & loan figures the same $amount in a sales transaction?
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An appraiser looks at 3 different measurements of value. Market value(what it would sell for in a typical transfer),income value(what it would rent for),cost value(what it would cost to replace if lost in a fire or such. Most appraisers rely on market value approach and they use current sales in the area that are houses similar to yours. They adjust values for differences in living area,basements,garages,pools,etc to arrive at a final adjusted value. They look at all the bottom lines to come up with a reconciliation of value. It is not "cookbook science" and that is why appraisers have so much schooling and need to know your market area well to be accurate. Loan value is what a bank will loan on a house. Market value is would it should sell for.
In response to Drew. Not all appraisers are bank whores and it is ignorant to say that. I have enough clients that I value the property,higher or lower, regardless what the bank whats.There is a science involved because trillions are loaned on appraisers recommendations daily.
Market value is similar to what a buyer would pay, loan value is the amount of money borrowed against the property's value. The appraisal provides an ESTIMATE of value, which is an opinion of value based on sales and what buyers might be willing to pay. Assessed value is for tax purposes.
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do you mean market value and sales price? your loan has nothing to do with your value. An appraiser will try to get the sales price, based on comparables he finds that sold recently.
Appraising is far from a science.There is a lot of number voodoo, It is not a safety to stop banks from over lending like to is meant to be since if an appraiser turn down to many loans they will not use them any more.
So truth be told there sort of whore of the bank and a great scape goat to have once the market crashes.