Misconception · MIS:collateral-appraisal-equals-expected-collection

Mistaken idea “A collateral appraisal equals expected collection”

Mistaken reasoning: This mistake copies appraised value without establishing repayment source, priority, condition, valuation premise, costs, senior claims, or reporting date.

Updated Aug 21, 2026 Review due Nov 7, 2026

Why this is mistaken

Establish the expected source of repayment and applicable collateral path, then control valuation, priority, condition, costs, and reporting-date evidence.

Where to watch

When this mistake may appear

The collateral is worth more than the loan.
We have a recent appraisal.

Check your work

Your work may contain this mistake if:

Sets allowance to zero from appraisal.
Ignores costs and priority.
Never establishes collateral dependence.