Appraisals for Mortgage Bankers
- Buying an apartment in Israel
- Appraisal and value of an apartment
The appraiser plays a key role in giving the mortgage bank the tools to decide whether to lend money to an apartment buyer. In fact, an appraiser will estimate the market value of a particular apartment, and from this amount he will make a number of financial reductions.
First, it will reduce the value of the apartment in case of ‘quick realization’ if required, because if the borrower does not repay her mortgage, the mortgage bank will strive to sell the apartment as soon as possible. This constraint is worth money which will be deducted from the price of the apartment.
Second, the appraiser will estimate full taxes that will be required to be paid for the sale of the apartment, without taking into account exemptions or reliefs in appreciation tax.
After all, at the time of granting the loan, the bank cannot be convinced of the tax relief that the seller of the apartment will receive and whether he will receive it.
And as mentioned, in order for the bank to be exposed to minimal risk, it will prefer to reduce taxes.