How Does a Hard Money Lender Value My Property?

How Does a Hard Money Lender Value My Property?

When making a loan, a bank and a hard money lender both have different opinions when it comes to determining the value of the property. A hard money lender takes a very conservative approach to property value. For example, the appraised value means nothing to the hard money lender. Instead, a hard money lender will determine the value of the property as if they had to sell it in 30 to 90 days. This is sometimes called a “fire sale” value. If a borrower defaults on a hard money loan, hard money lenders will be able to sell the property quickly at the “fire sale value” to recover their investment. For this reason, a hard money loan is usually in the range of 60-80% of the purchase price. For example, if you are buying a property for $100,000, a hard money lender will give you between $60,000 to $80,000 max of the purchase price.

 

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About the author

Corey Curwick Dutton Corey Curwick Dutton, MBA Park City, Utah 2005 MBA Graduate with 10 years experience in Business Management including International Management. Corey is a Senior Private Money Consultant at Private Money Utah. Corey enjoys the great outdoors of Utah including, mountain biking, camping, hiking, and touring in winter. Google

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