USPAP Compliant Evaluations

Evaluations

Evaluations are reports that banks use in specific lending circumstances and fall under the inter-agency guidelines. Evaluations aren’t to be confused with appraisals, which must uphold the guidelines laid out in the Uniform Standards of Professional Appraisal Practice (USPAP). Appraisers must meet the USPAP with each appraisal they conduct. Some appraisers may have heard or concluded that they cannot prepare evaluations. After all, their minimum requirements don’t meet USPAP standards. Despite what you might have heard, you can write evaluations.

Federally regulated banks and credit unions engage in five types of transactions that don’t require USPAP compliant appraisals.

The following only require evaluations:

• Commercial real estate transactions worth less than $500,000
• Any real estate transaction valued under $250,000
• Qualified business loans worth under $1M
• Subsequent transactions with no advancement of new money and no change in market conditions affecting the property since the last transaction
• Real estate transactions in rural areas with a value of less than $400,000. The financial institution must have also made a genuine attempt to obtain an appraisal.

Conducting Evaluations as an Appraiser

Here’s the catch: unless you’re an appraiser operating out of North Carolina, Virginia, or Tennessee, any evaluation you write, within the restricted components, must meet USPAP and federal appraisal requirements. This means that conducting an evaluation can take just as much work as an appraisal.

If your hands are already full, evaluations may cost you more time and effort than they’re worth. On the other hand, most financial institutions will opt for evaluations over appraisals if they are permitted to do so. Refusing to do any evaluation work could cause you to lose clients to less competent, less qualified, non-appraisers.

Adding evaluations to your offerings doesn’t have to be intimidating, however they are basically Restricted reports. At the end of the day, writing them isn’t really about your ability to do so. They’re not any more complicated than the restricted reports you’ve done. All you need to do is learn the difference in requirements between evaluation and appraisal reports. Once you’re comfortable with the parameters, you’ll be able to provide clients with options — that’s a critical ability to have right now. Your list of projects expands to more straightforward properties, and you could convince clients to upgrade more complicated cases to full appraisals.

Are you looking to branch out? Valcre's’s appraisal management platform offers subscribers ready-set evaluation templates and extensive support services. Give Valcre a try and see what we can do for you.

Schedule a demo to learn more!