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Real Estate Evaluation

For certain transactions (e.g., those that are below the de minimis), the federal banking regulators allow lending institutions under their jurisdiction to obtain a real estate evaluation in lieu of an appraisal. According to the “Interagency Appraisal and Evaluation Guidelines,” evaluations must include the effective date of the valuation; describe the real estate collateral, its condition, as well as its current and projected use; describe the information source(s) used in the analysis; describe the analysis and supporting information; and provide an estimate of the real estate’s market value, with any limiting conditions. Provided the lender properly validates the model and develops appropriate usage rules, an AVM’s output usually qualifies as a real estate evaluation.