Property Valuation
A property is listed with an asking price of $375,000. The appraiser's market value conclusion is $350,000. The lender will base the loan on:
AThe asking price of $375,000
BThe lower of the appraised value or the purchase price✓ Correct
CThe average of the asking price and appraised value
DThe purchase price negotiated by the parties
Explanation
Lenders base loan amounts on the lower of the appraised value or the contract purchase price to protect against over-lending relative to the property's demonstrated market value.
Related Alabama Property Valuation Questions
- Physical deterioration that can be economically repaired is called:
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