Question: Finance & Real Estate Open Ended Question When underwriting a loan, a bank will require an independent appraisal (valuation) of the property for which the

Finance & Real Estate Open Ended Question

When underwriting a loan, a bank will require an independent appraisal (valuation) of the property for which the loan is intended. It will then provide a loan based on the lower of the Transaction Price and the Appraised Value. Explain why a bank does that in terms risk mitigation.

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