Collateral Valuation techniques: What is just a borrower’s security worth?

Commercial borrowers may pledge gear, genuine home, opportunities along with other assets as loan collateral. Nevertheless the amount shown for a borrower’s balance sheet might not reflect an item’s market value. An official asset assessment can really help lenders know how much a secured asset is well worth today.

Review appraisal rules

The approaches to valuing an asset are essentially the same whether you’re appraising a building, trademark, artwork or investments in a subsidiary. Appraisal boils down seriously to three techniques that are primary

Cost approach. The worthiness of a secured item may be based on the fee to restore or replicate it. Continue reading