Another great article from the Illinois appraisal regulator
The argument to promote evaluations as an alternative to appraisals was driven by rural lenders who feared a shortage of appraisers might slow down closings. That was it. That was the main beef. A simple supply and demand issue for banks in the boonies… twenty years ago! An evaluation was regarded as “a generally simpler assessment
of real estate market value.”
Evaluations versus Appraisals (2012) —
The most recent incarnation of the Interagency Appraisal and Evaluation Guidelines emerged in December of 2010. Section XIII provides the suggested content of a evaluation…“a generally simpler assessment of real estate market value.
(BPOs cannot be used for evaluations.) A valuation method that does not provide a property’s market value or sufficient information and analysis to support the value conclusion is not acceptable as an evaluation. For example, a valuation method that
provides a sales or list price, such as a broker price opinion, cannot be used as an evaluation because, among other things, it does not provide a property’s market value.
If you want to know what the feds meant by “a simpler assessment”, go ask them. I’d love to hear that explanation myself.
Many AMCs, while eager to take on the evaluation function, fail to understand who is ultimately responsible for the entire program. (Their clients, the lenders)
Banks cannot hand‐off liability to AMCs like a hot potato just because they can’t be bothered managing their own evaluation program. If an AMC makes a mess of the bank’s
evaluation program, the responsibility of the failure falls squarely back on the bank.
Turning an evaluation into an USPAP compliant appraisal takes far less effort than trying to cobble together a cadre of competent and reliable evaluators to provide something that by state statute,must fall short of an appraisal.
My comment: This is an issue that has been around since the early 1990s. What does an evaluation mean? Cheap and fast. Banks want them. AMCs would love to provide them. I have no idea who would do them and what they look like. I have no idea how a licensed appraiser would do them as they must be USPAP compliant.
Seems easier to me just to do an appraisal. Maybe a shorter appraisal that is not 30 pages long with 9 comps and pages and pages of explanations!! Now that is a very practical idea. Just go back to the past pre-HVCC and incredible scope creep since then.