Property Valuation
In New Mexico, an appraiser who values a property at a lower amount than the purchase price is providing:
AA fraudulent appraisal
BAn independent professional opinion that may cause the lender to limit the loan amount or require renegotiation✓ Correct
CA guarantee that the buyer overpaid
DGrounds to cancel the purchase automatically
Explanation
A low appraisal reflects the appraiser's independent opinion of market value. If the appraisal comes in below the purchase price, the lender may limit financing to the appraised value, potentially triggering an appraisal contingency.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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