Have you read the news about federal regulation for property valuations? Appraisal requirements are likely to get a long-awaited update. The Wall Street Journal reached out to talk to me about the changes and discuss HouseCanary’s role in the future of property valuation.
The change in the works is an update to the de minimis appraisal threshold for residential real estate, which is the size at which a residential property loan requires a full appraisal by a licensed appraiser.
The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp (FDIC) have now approved raising the de minimis to $400,000. Once the Federal Reserve passes this rule, the change will go into effect in January 2020, enabling a majority of the housing stock in the United States to become eligible for technology-based property valuations. In an industry that’s already facing a shortage of licensed appraisers, this is good news across the board for real estate buyers, sellers, and investors who want to work faster and reduce friction.
HouseCanary’s Agile Evaluation is a condition-informed evaluation that helps lenders cut valuation costs dramatically on transactions below the de minimis. Agile Evaluation is faster and more convenient than an appraisal, at a lower price. We’ve designed this product to comply with the Interagency Guidelines (IAG) requirements for use in real estate transactions below the de minimis threshold. When used in accordance with IAG guidance, Agile Evaluation can be Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) compliant. Agile Evaluation also has applications for loan renewals, refinances, and non-conforming originations.
I showed WSJ journalist Ryan Dezember what an Agile Evaluation report looks like, and told him that the only human element is the person who takes the inspection photos. Everything else is software. Agile Evaluation is a leap forward from an appraisal. This product provides deeper context than an appraisal, and additional risk information. Our cutting-edge system determines a property’s fair market value by incorporating inspection data into our proprietary valuation technology, and removes much of the risk that may arise due to human valuation bias. We deliver standard Agile Evaluations with exterior inspection in four business days, whereas the average appraisal can take three weeks.