Evaluation
A valuation of real property that does not require a state-licensed or certified appraiser, permitted for federally related transactions below the de minimis threshold. Less rigorous than a formal appraisal.
Evaluations are governed by the Interagency Appraisal and Evaluation Guidelines. They must contain sufficient information to support the credit decision but do not require USPAP compliance, specific report formats, or licensed appraisers. An evaluation must include a property description, market analysis, and value conclusion, and must be performed by someone with relevant training and market knowledge. Financial institutions set their own evaluation standards within the regulatory framework. Evaluations cannot be used for complex properties, high-value transactions, or when the regulator requires an appraisal.
Related Terms
De Minimis Threshold
The transaction value below which a federally related real estate transaction does not require an appraisal by a licensed or certified appraiser.
FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act)
FIRREAThe 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Appraisal Report
Under USPAP, a written report that summarizes the appraiser's analysis and conclusions in sufficient detail for the intended users to understand the basis of the value opinion.
More in Legal & Regulatory
View allUniform Standards of Professional Appraisal Practice (USPAP)
USPAPThe nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
Appraiser Independence
The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome.
Competency Rule
A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment..