Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-04-27
AS AN INVESTMENT.
NJ ethods of Reaching a True Valua-
ton

To properly make a just valuation OF
property equitable in character to both
lender and borrower has long been
troublesome question with those called
upon to act as appraisers of property upon
which the borrower wishes to place
mortgage security for a loan. Many
have sought for the solution of the per-
picking question by the adoption of some
certain and single rule that would at once
give ample security to the lender with
universal satisfaction to borrowers.
The lender always insists upon a very
safe investment. while the borrower re
CARDS the property offered as a splendid
security for the money wanted.
The owner of property negotiating for
a loan, when called upon to place value
upon his property finds it impossible to
disabuse his mind of the actual cost to
him of his investment with the enhanced
value by the addition of improvem ents
made by himself. the making of streets or
ALLEYS and the extensive improvements
of any kind made SO recently in his imme-
date neighborhood. The value he places
upon his property is the value of his own
home to himself. and is too frequently
speculative or fictitious valuation.
All loans on properly should. of course,
be made on the basis of the supposed ac-
tual cash valuation. The careful money
lender limits his loan to about two thirds,
or about 10 per cent of this valuation.
That is about the rule adopted by trust
and banking companies and individuals
lOaning money on mortgage on real estate
and improvements. The building and loan
associations are. of course. in many in
stances more liberal but the nearer they
keep to that line the safer will be their
VeStmentS.
To determine this valuation is the bust
ness of the expert. aided by the assess
ment books, the record of late sales in the
neighbOrhood. and by a study of all cir
cumstances which may have a bearing
upon the future value of the property in
question. The asses ment for taxes is
sometimes too high and sometimes TOO
low. but it IS in the absence OF better
other evidence on the subject, considered
to be somewhere in the neighborhood OF
Just what can be safely loaned on 1t, be-
ing in majority of cases about two
thirds of the actual marfsSt or cash value
Many cases can be cited, however. where
business property has been sold for more
than twice the assessors valuation. II is,
nevertheless always best to consult the
books OF the assessor in attempt nS to de-
terrnine the valuation of property, for in
nearly all disputes as to the valuation OF
real estate or improvements. especially IN
legal controversies in courts. the evidence
of the assessor OF mis- deputy is received as
that of an expert
It is impossible for appraiscment com
mitteeS of build ng associations to eXer-
else too much care or caution about
matter of such Importance. When the
loan by mortgage on piece OF property
is about equal to its value, it is seldom
that the borrower pays the loan, for to
pay ii is like buying the property again,
and sometimes where reduction of value
occurs it is paying more than the property
is worth to pay the loan. In time the en-
tire assets of an association are nearly COM
posed of the money loaned out on mort
gage. and the safer and more prudent has
been the loaning of the money on mort
gage. the building desired on the lot IN
question.