How to value real estate on a personal financial statement

The standard: current fair market value, supported

Every common form — bank statements, SBA Form 413, lender schedules — asks for present value, and the discipline is the same across all of them:

• As-is, today — not purchase price, not cost plus improvements, not what it'll be worth after the renovation
• Round honestly — "$850,000" reads as an estimate; "$851,375" invites the question of where the precision came from
• The mortgage is a separate line — property at value on the asset side, payoff balance on the liability side; "equity" as a single line breaks the statement's structure
• Be ready to show your work — whatever the source, keep it with your statement's support file

Acceptable support, strongest to weakest

1. A recent appraisal — the gold standard while it's fresh (roughly a year, less in a fast-moving market). Lenders may still order their own, but yours anchors the number.
2. Closed comparable sales — two or three genuinely similar, recent sales nearby. This is what an appraiser would lean on anyway.
3. A broker price opinion — a written opinion from an agent who knows the submarket; common support for investor schedules.
4. Income math, for rental property — net operating income divided by a market cap rate. Underwriters will run this check themselves, so running it first keeps your number defensible.
5. Tax assessed value — jurisdiction-dependent and often lagging or deliberately below market; usable as a floor or sanity check more than a headline value.
6. Online estimates (Zillow and similar) — a starting point, not support. Fine for a sanity check; weak as the sole basis for a number a lender will underwrite.

The special cases

• Income property: value and income should agree. A property valued at $2M showing $60k of NOI implies a 3% cap rate — if that's not the market, one of the two numbers is wrong, and the underwriter will ask which.
• Partial ownership: show either full value and full debt with your percentage noted, or your share of both — and say which convention you're using. Mixing conventions across rows is what gets schedules kicked back; the investor's guide covers this in depth.
• Property in an LLC: most lenders want it on your real estate schedule anyway, with the entity and your percentage — just don't double-count it inside a separately valued entity interest.
• Your home: same rules, slightly more restraint. Primary-residence equity is the number borrowers inflate most and lenders discount most.
• Recent purchases: for the first year or so, what you paid IS the market's opinion of value — mark it up only when something real (an appraisal, completed improvements, clear comps) supports the move. More in updating your PFS after buying property.

What lenders do with your number

Underwriters treat owner-estimated real estate values as claims to test, not facts to accept. Expect them to sanity-check against public records, AVMs, and their own market knowledge; haircut generously (equity in real estate is routinely discounted 20–30% or more in liquidity-minded analyses); recompute leverage per property (value minus debt, row by row); and compare against every other statement you've submitted — last year's, and the one you gave the bank down the street on a participation. That last check is the one that hurts: the same property carrying three different values in three files is a credibility problem no explanation fully repairs. And when the property is the collateral itself, your estimate is a placeholder either way — the lender orders its own appraisal, and a big gap between your number and theirs restarts the loan-sizing conversation from the appraisal.

Consistency beats optimism

Across statements and across time, the property whose value moves smoothly and defensibly — appraisal to appraisal, market to market — is the one lenders stop questioning. Pick a method per property, write it down, apply it every time, and change the number when the support changes rather than when a loan application would benefit.

A one-line valuation memo per property makes the discipline nearly free: the method ("comps" / "appraisal dated…" / "NOI ÷ cap"), the inputs, the date, and the resulting number, kept with your statement's support file. When a lender asks where $850,000 came from — and on larger files they do — the answer takes thirty seconds instead of a weekend of reconstruction, and the next statement starts from the memo instead of from scratch. Keeping the rest current is mostly a bookkeeping problem: one maintained record of properties, methods, and values, updated on events instead of rebuilt per request — the model real estate investors on LivePFS run, with mortgage balances syncing daily against values they control.