U.S. bank regulators said on Monday that more commercial real estate deals can proceed without an independent appraisal of the property’s value.
The regulators raised the threshold for commercial real estate transactions that require an appraisal from $250,000 to $500,000. Commercial transactions that are valued at more than $500,000 must still have an independent third-party check on the property value before the bank will process a loan; transactions under that amount will be able to proceed ahead of getting an appraisal.
The new threshold “will materially reduce regulatory burden and the number of transactions that require an appraisal,” according to a press release from the U.S. regulators. “The increased threshold will not pose a threat to the safety and soundness of financial institutions.”
Lenders can use an evaluation rather than an appraisal for a commercial real estate transaction that is exempted by the $500,000 threshold. Evaluations provide a market value estimate.
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