Posted by David Butler on January 08, 2001 at 20:02:36:
On a general basis, a note buyer is going to want an appraisal, and, in most cases, the appraisal is going to use the comparative market value approach for residential units for 4 of less units. You’ll note that the standard appraisal Form 1004 (or the Small Residential Income Property Appraisal Report Form 1025 - for 2/4 unit family properties) will generally be used, and includes valuations for cost replacement, and income approach (if known rental property)- but market valuation is still the primary approach.
However, an astute note buyer is going to be looking at the APOD and factor in the property operating history in determining the soundness of the note itself, within the context of the total circumstances in which it was created - which can make or break a deal in the case of weak Payor credit, or limited hard equity contribution at time of purchase (low down payments).
Hope this helps, and best of luck!
David P. Butler