According to the Appraisal Institute: "an evaluation is defined in the Guidelines as 'A valuation permitted by the Agencies’ appraisal regulations for transactions that qualify for the appraisal threshold exemption, business loan exemption, or subsequent transaction exemption.'" In other words, an Evaluation is a more limited valuation, takes less time to complete, and is cheaper to produce. Below we tell you all you need to know about evaluations and why you should come to us when you need one! When to do an Evaluation: A transaction with a value of $250,000 or less, or a business loan of $1 million or less does not require an appraisal, but does require an evaluation.
The Requirements for an Evaluation: According to the Appraisal Institute, an evaluation must do all of the following: • Be consistent with safe and sound banking practices • Support the institution’s decision to engage in the transaction • Provide a reliable estimate of the collateral’s market value as of a stated effective date prior to the decision to enter into the transaction • Be based on a valuation method that is appropriate for a transaction rather than the method that renders the highest value, lowest cost, or fastest turnaround time • Address the property’s actual physical condition and characteristics • Address the economic and market conditions that effect the estimate of the collateral’s market value, and • Not be based on unsupported assumptions, such as an assumption that the property is in average condition, the zoning will change, or the property is not affected by adverse market conditions. Who Can Write an Evaluation: According to the guidelines, whoever performs an evaluation should be independent of the loan production. Many banks spend time evaluating their collateral themselves. When trying to close a loan, we know time is of the essence. This is where we can help. We are one of 68 offices in the Valbridge Property Advisors network and we have an incredible team backed by nearly 40 years in the Kansas City market. When you get an evaluation written by us, you are getting timely, accurate information that is signed by one of our six MAI-designated appraisers. Now that you're familiar with this type of report, how can we help you evaluate your collateral?
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