Real estate appraisal reviews have become an essential part of the lending process.
By definition, a real estate appraisal review is utilized to investigate, analyze and verify the logic and procedures utilized in a real estate appraisal.
Weber Real Estate Advisors’ definition of an appraisal review is the review of a real estate appraisal report that is completed to make sure that the appraisal report under review is completed in a manner that makes sure that it meets your guidelines and ultimately makes sense. In other woods, it is not rotten.
A review by Weber Real Estate Advisors can help assure a lender that a reliable real estate appraisal has been competently prepared and can be utilized as a benchmark for a lender to determine if the real estate that is the subject of the appraisal provides sufficient and adequate collateral for a loan.
A review completed by Weber Real Estate Advisors is a valuable part of your quality-control program.
From the perspective as an industry veteran, I can tell you with absolute certainty that a competently completed appraisal review that is completed by Weber Real Estate Advisors is valuable to the lender because it reveals common errors and mistakes that can be corrected to make sure that the report can be relied upon for lending decisions.
An appraiser’s job within their report is to tell a story of value in such a way that a reader will understand the reasoning that was used, and a review will check to see that the value that was arrived at is supported and believable.
Weber Real Estate Advisors’ research has shown that lenders are more likely to require an appraisal review when the borrower or the property that will be utilized as collateral presents more risk.
In some circumstances, a lender will determine that they should get a second appraisal after a review.
A second appraisal is ordered because the initial appraisal was not adequate. Red flags may have been raised by the initial appraisal and the review.
The reasons for ordering a second appraisal may include:
Per the Guidelines (FR/Vol.75 462), “an institution should review appraisals and valuations to ensure they comply with the agencies’ appraisal regulations and are consistent with supervisory guidance and its own internal policies.”