Many clients utilize or have noticed our SMART products in the dropdown box of available report options. As a result, we receive a handful of calls and questions each week wanting to understand “What is a SMART?”
It is a tool for our clients to obtain a reliable, inexpensive, and timely commercial appraisal report. SMART is an acronym for Specific Market Analysis Report & Trends. Our SMART reports are in-house, restricted format appraisals performed by a qualified commercial appraiser who holds a Certified General appraiser license. SMART reports meet USPAP requirements for a restricted report and Interagency Appraisal and Evaluation Guidelines requirements for an Evaluation. SMART reports include an independent Technical Review of the report by a qualified in-house commercial appraiser who holds a Certified General appraiser license. This product is a cost efficient and timely valuation option, depending on the lending institution’s policy as to when a restricted format and/or evaluation is allowed.
There are five common exemptions to full appraisal requirements, as follows:
- When a very abbreviated appraisal report that is consistent with the intended use of the appraisal is desired and the institution is the only user of the report, and the institution is already familiar with the property to some extent, and the institution does not desire to see details regarding the subject or the valuation;
- Transaction value $250,000 or less;
- Lien on real estate taken as collateral in an abundance of caution;
- Business loan with a transaction value of $1 million or less and not dependent on the sale of, or rental income derived from, real estate as the primary source of repayment; or
- Subsequent transaction of an existing credit at the institution if certain conditions are met. (This would include a renewal of an existing loan at maturity; refinancing of an existing loan prior to maturity; modification that involves more than a limited change in terms; and acquisition of other real estate.)
Here are some recent orders of SMART reports that VMG has handled in-house and in each case the SMART product with independent technical review was a good alternative to a full appraisal report for our client, saving both time and money:
- A 4,000 square foot, owner-occupied, existing office building on a 1.0-acre site in Florida. This was a refinance of an existing loan prior to maturity. The product we provided was a SMART Evaluation (desktop with sales approach only) including an independent Technical Review. The client saved money and the turn time was 8 business days.
- A 2,500 square foot, two-unit, existing office condominium in Georgia. This was a transaction value of less than $250,000. The product we provided was a SMART Evaluation (interior inspection with sales approach only) including an independent Technical Review. The client saved money and the turn time was 6 business days, allowing the client to be competitive with other financial institutions.
- A 5,000 square foot, three-unit, existing retail building on a 0.20-acre site in Georgia. An abbreviated appraisal report was desired and the institution was the only user of the report, and the institution was already familiar with the property to some extent, and the institution did not desire to see details regarding the subject or the valuation. The product we provided was a SMART Evaluation (interior inspection with sales and income approaches) and included an independent Technical Review. Again, the client saved money and the turn time was 8 business days.
To view our pricing guide for metro and non-metro properties, please CLICK HERE.
Please feel free to contact Shannon Reyome by email at Shannon.firstname.lastname@example.org or by phone at 770-373-5538 if you would like assistance in determining if a property and loan qualify for this valuation type. There are some limitations to the SMART product depending upon various property-specific characteristics such as location, occupancy type, complexity of the property type, and/or loan specifics.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. In addition to offering full service appraisal management services for residential and commercials assignments, we also offer review only services for clients who wish to manage engagement of the appraiser themselves. We take the appraisal process from ordinary to extraordinary.