Aspects of a Compliant Appraisal Management Review Process
In the market to partner with an AMC for commercial real estate valuation? How can you ensure you’re working with a 100 percent compliant appraiser and reviewer?
When a business owner or organization is in the market to purchase a commercial space, their lending institution will require an appraisal of the property in question in order to obtain an updated value of the property to be mortgaged. Many lending institutions use commercial appraisal management companies (AMCs), like Oxford Commercial Appraisal Management, to manage the appraisal process.
And while the process sounds pretty straightforward – and AMCs definitely help make it seem so – there is a complex process that AMCs must adhere to in order to ensure a compliant appraisal management review process. After all, AMC appraisals add an important layer of oversight to the appraisal process. And with federal and state requirements constantly evolving, it is important that management companies dedicate themselves to a tried and trusted process what is both easy to follow and extremely efficient.
If you’re in the market to purchase a commercial property, and especially if you’re shopping around for a quality AMC, it is important to know what to look out for in terms of a management company with a proper compliance process. That’s why we, the experts at Oxford Commercial Appraisal Management, are here to share insight into the proper practices of a compliant appraisal management and review process. Check it out:
Commercial appraisal processes for lenders and financial institutions are a serious area of regulation that is often over looked by the institution.
When is compliance necessary?
The Appraisal Institute requires that all parties involved in conducting an appraisal and review is compliant with professional valuation standards. Professional valuation standards may be the Appraisal Institute Standards of Valuation Practice (SVP) or applicable national or international standards, such as USPAP or IVS.
The Appraisal Institute’s SVP defines “review” as “the act or process of developing and communicating an opinion to a client about the quality of another’s appraisal or review report.”
In USPAP, “appraisal review” is defined as “the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.”
Quality control is forefront
Evolving rules will change the way AMCs perform their compliance quality control process. The degree to which this change occurs will vary on a case-by-case basis, but the first step for every AMC is to ensure that compliance quality control processes are fully aligned with any and all new requirements.
When change occurs, both manual and automated order systems must be updated. The most difficult hurdle for the AMC will be dealing with further refinements that will undoubtedly be handed down until the requirements are set in stone. It could be a daunting process but is 100 percent essential in maintaining an updated and compliant database.
Qualifications must be met
A good number of states require appraisal reviews by the AMC and, in most cases, the review must be performed by an appraiser who is credentialed in the state of the property being reviewed. Unfortunately, not all AMCs get their appraiser licensed in all the states that require licensure.
Even more, many AMCs fail to provide a comprehensive written review, resulting in a process that fails to proper evidence of a compliant review.
At Oxford Commercial Appraisal Management, we offer the full array of commercial appraisal products and services. We take the appraisal process from ordinary to extraordinary by not only employing/enlisted the top credentialed appraisers (many of our reviewers carry the prestigious MAI designation), but also by documenting the entire appraisal review process every step of the way. So how do we do this?
- We operate on a secure, online portal that is available to our staff, clients, and vendors 24/7
- We monitor every detail of a process that has been refined over many years
- We work WITH you. We select winning bids based on your criteria
- We send you email updates on all order progress
- When completed, we will review and certify the appraisal for 100 percent compliance
- We store all order documents online for five years
- You will have access to all of these docs through login credentials
What to expect in a review
Ironically, review reports are most efficient when brief. The review should clearly differentiate information from the appraisal and the reviewer’s personal notes/information. For example, when intended use is stated in the review, are you able to state whether it’s the appraiser’s intended use or the reviewer’s?
Remember, the review should focus on the work under review. The reviewer’s opinions about the quality of the work must be presented in a clear manner. Review forms and formats must be used.
Does your financial institution work with an AMC?
Some lenders and financial institutions will manage their review processes internally, but there are countless benefits to outsourcing the compliance review to an AMC. The benefits of engaging a competent and well managed AMC include:
- Appraisal compliance
- Consistent valuation services
- Quality control functions
- Experts in valuation services
- Expense reduction
Of course, it is in the institution’s best interest to conduct proper due diligence on any third party to ensure they are financially stable and a suitable partner for the institution and, when working with Oxford Commercial Appraisal Management, this process becomes straightforward, simple, and reliable.
We at Oxford pride ourselves on our dedication to work with both lenders and regulators to offer unmatched third-party appraisal management expertise to financial institutions. Oxford’s highly-skilled and experienced appraisers, nearly all of whom hold the MAI designation, perform every technical management and review aspect required for compliance. Our services are unmatched and we ensure 100 percent compliance each and every time. Contact the experts at Oxford today; we can’t wait to hear from you!