What is an Appraisal?

An appraisal is an independent professional valuation of a property conducted by a licensed appraiser, providing an objective estimate of market value used in:

Underwriting

Lending

asset-level reporting

investor disclosure

for real estate transactions.

Appraisals form the foundation of sound real estate finance, ensuring that lenders, investors, and transaction participants have reliable, third-party validation of property value.

How an Appraisal Works

A licensed appraiser inspects the property and applies one or more valuation methods to determine its market value. The three standard approaches are the sales comparison approach (analyzing recent comparable sales), the income capitalization approach (converting the property's net operating income into a value using a cap rate), and the cost approach (estimating the replacement cost of the structure minus depreciation, plus land value).

The appraiser selects the approach or combination of approaches most appropriate for the property type. For income-producing real estate, the income capitalization and sales comparison approaches typically carry the most weight.

Why Appraisals Matter in Real Estate Finance

Lenders require appraisals before originating a mortgage. The appraised value determines the loan-to-value ratio, which governs how much debt the property can support.

If the appraised value comes in below the purchase price, the lender reduces the loan amount, and the buyer must bridge the gap with additional equity.

For investors, the appraisal provides an independent check on the price being paid for an asset. It is not the only input into valuation, but it is the only input produced by a licensed professional with no financial interest in the transaction's outcome.

Regular reappraisals provide transparency and ensure that token valuations remain grounded in current market conditions.

Appraisals in Tokenized Real Estate

When a property is tokenized through an SPV, the appraisal serves the same function it serves in traditional real estate: an independent valuation that supports the underwriting and protects investors from overpaying.

The appraised value anchors the offering price and provides the denominator for key metrics like cap rate and LTV.

Appraisals may also be conducted periodically during the holding period to update asset-level reporting. These reappraisals help investors track whether the property's market value is appreciating, stable, or declining relative to the original underwriting assumptions.

Appraisal at Node Proptech

Node includes appraisal data in the offering materials for each SPV. The appraised value, the appraiser's methodology, and any material assumptions are disclosed in the Private Placement Memorandum.

Investors can compare the appraised value against the offering price to assess whether the asset is being acquired at, above, or below independent market value.This transparency ensures that all participants have equal access to critical valuation information.