Why Use an Evaluation?

• This Agricultural evaluation format is for agricultural uses only NOT for residential uses as 5-acre single-family homes.
• Evaluations save borrowers at least 42% in fees compared to appraisals.
• The evaluation report presents a brief property description and valuation.
• FIRREA provides that an Evaluation will meet Regulatory criteria for Bank examiners.

Guidelines and Threshold

• Evaluations can be used for Consumer (Non-Residential) Loan amount ($400,000 or less), commercial real estate transaction ($500,000 or less) and business loan that has a transaction value of $1 million or less where the loan does not depend on the sale of, or rental income derived from, real estate as the primary source of repayment.
• Evaluations can be used for modifications / renewal / extension of current credit with no new money other than typical closing costs. There has been no obvious and material change in market conditions or physical aspects of the property that threatens the adequacy of the institution’s real estate collateral protection after transaction even with the advancement of new monies.
• Evaluations cannot be used in states with mandatory licensing /certification that must have appraisals prepared by appraisers licensed within state.
• Licensee needs to review state specific guidelines for Evaluation for various states – Alabama, Florida, Georgia, Illinois, Indiana, Louisiana, Oregon, South Dakota, Tennessee, Utah, and Virginia.
• Ensure staff has requisite expertise and training to manage the selection, use and validation of valuation method or technological tool.
• Property is not overly complex for typical scope of work; accordingly, a bank should have qualified personnel dedicated to completing evaluations or may use a third party as an evaluation or restricted appraisal report.

Benefit of Using On-Line Evaluation Format

• Evaluation format incorporates land only uses, livestock (hogs, poultry, dairy), permanent plantings and other agricultural uses.
• Consumer friendly format for real estate closings, main evaluation document (excluding exhibits) are 8 pages for more efficient streamlined underwriting process.
• Dropdown tabs saves hours in evaluation processing time; enhances consistent collateral data gathering from borrowers saving bankers time and money.
• Competent bank designated vendors can perform inspections from separate inspection form tab (page 8) saving bankers time.
• Formats can be escalated to a restricted use report if complexity or appraisal thresholds are not met.
• Secure storage.
• Handy evaluation checklist for compliance purposes.