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FAQs & Glossary

Being accessible to answer your questions is very important to us! Here we’ve listed some of our most frequently asked questions to provide you with some quick answers. Don’t hesitate to contact us with any additional questions or comments.

FAQs

Glossary

Appraisal (Property Valuation)

An unbiased, independently written prepared by a state-licensed and/or certified appraiser. It states an opinion of market value of a subject property as of a certain date. This report summarizes the expert’s evaluation of a home and property to estimate how much it is worth.

Appraisal Management Company (AMC)

An independent organization through which mortgage lenders order real estate valuation services for properties on which they are considering extending loans to homebuyers. Some of the services provided are selecting and engaging an appraiser, ordering the appraisal/evaluation, auditing the appraisal for ethical, performance and compliance standards, accounts payable and receivable, and record retention.

Approved Appraiser

A community lender list of board approved appraisers, qualified and competent to perform evaluations in a specific area.

Automated Valuation Model (AVM)

A computer program service that can provide real estate property valuations using a variety of mathematical models combined with a database of information. Most AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties. Some also take into account previous surveyor valuations, historical house price movements and user inputs (e.g. number of bedrooms, property improvements, etc.). An AVM is not by itself an appraisal or evaluation, as defined the Federal Reserve’s Interim Final Rule. Property taxes are often calculated in this manner.

Broker Price Opinion (BPO)

A report that is composed by a licensed real estate agent, broker or appraiser. A BPO generally provides a varying level of detail about a property’s condition, market, and neighborhood, as well as comparable sales or listings. A BPO is not by itself an appraisal or evaluation, but could be used to review the value of an existing loan, when resumed appropriate. A BPO can be either an Exterior Drive-By or a Full Interior report. BPO’s are not allowed in some states.

Client

USPAP states this is the party who engages or employs an appraiser for a specific appraisal. Regulatory agencies consider the client to be the bank/credit union.

Date of the Appraisal Report

USPAP states the date of the appraisal report which indicates when the appraisal was completed.

Effective Date of the Appraisal

The date of the appraisal report that indicates the perspective from which the appraiser is examining the market and is usually the date of the inspection. To be USPAP compliant, the appraisal is required to have both an effective date of the appraisal and the date of the report. The effective date of the appraisal establishes the conditions for the value opinion.

Engagement Letter or Agreement

A document between an appraiser and a lender or appraisal management company that establishes the request/order and expectations to the appraisal assignment.

Evaluation

A valuation permitted by the Agencies’ appraisal regulations for transactions that qualify for the appraisal threshold exemption, business loan exemption, or subsequent transaction exemption.

Federally Regulated Institution

Any establishment that is supervised by a federal or state regulatory agency. This includes national or state-chartered banks, bank holding companies, federal savings or savings and loan associations, and credit unions.

Federally Related Transaction

Any real estate related transaction in which a regulated institution utilizes the services of an appraiser/evaluator.

Restricted Use Appraisal Report

States information significant to solve the appraisal problem as well as a reference to the existence of specific work-file information in support of the appraiser's opinions and conclusions. USPAP states this report briefly states the information necessary to provide an Estimate of Value, with just a reference to the existence of work file information, but does not believe this report has enough information appropriate to underwrite a federally related transaction.

Sales History and Pending Sales

The appraiser must state and analyze all current agreements of sales or listings of the subject property as of the effective date of the appraisal, and also list all sales of the subject three years prior to the effective date, according to USPAP Standards Rule 1-5.

Scope of Work

USPAP has a Scope of Work rule that states it is the type and extent of research and analyses of each appraisal assignment.

Self-Contained Appraisal Report

This is the most complete and detailed appraisal report, according to USPAP and can have one, two, or three approaches to value, depending on the situation of the property and use of the appraisal.

Summary Appraisal Report

A synopsis of all information significant to the solution of the appraisal problem. These reports require a summary of the scope of work used to develop the appraisal, and the intended users of the Summary Appraisal Report should expect to find all data significant to the report in a brief, abbreviated format

Uniform Standards of Professional Appraisal Practice (USPAP)

The Appraisal Standards Board of the Appraisal Foundation sets forth USPAP; they are the minimum appraisal standards for federal transactions for all appraisal assignments. USPAP