An appraisal must conform to generally accepted appraisal standards as evidenced by USPAP unless principles of safe and sound banking require compliance with stricter standards. Specifically, an appraisal must:
•Be written and contain sufficient information and analysis to support the Bank’s decision to make the loan;
•Analyze and report deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units;
•Be based upon the definition of market value set forth in the regulations issued by the agencies issuing the Interagency Appraisal and Evaluation Guidelines (the “Agencies”).
•Be performed by a State-licensed or certified appraiser who must certify that he/she has complied with USPAP and is independent.
•Disclose any services that have been performed by the appraiser within the prior three years that involve the subject property.
•Disclose whether anyone provided significant assistance to the person signing the appraisal report and whether the person inspected the property.
•Once an appraisal is received by the Bank, the Bank should thoroughly review the appraisal. The Bank should not simply accept the bottom line value number. A sample Residential Real Estate Appraisal Review Checklist and Commercial Real Estate Appraisal Review Checklist are located at the end of this Chapter.