Who pays for the appraisal cost with a Hard Money Loan?

The borrower is responsible for covering the appraisal fee in Hard Money Loans

Who Pays for the Appraisal Fee?

In private lending, the borrower is typically responsible for covering the appraisal fee. This is a standard industry practice to ensure transparency and mitigate risks for the lender. Below is a detailed breakdown of the rationale:

1. Upfront Cost by the Borrower

• Since the loan is secured against the property, the lender requires an independent, professional valuation.
• The borrower pays this fee upfront because the appraisal is conducted before loan approval to confirm the property value.

2. Non-refundable Fee

• Appraisal fees are non-refundable, even if the loan is not approved or the borrower decides not to proceed.
• This ensures that the lender is not burdened with the cost of due diligence and that borrowers are serious about the loan application.

3. How the Fee is Charged

• The appraisal fee may range from $600 to $1000 depending on the property type, size, and location.
• Payment is often made directly to the appraiser or through a third party coordinating the process (e.g., mortgage broker or lender).