An External Appraisal Review acts as a critical quality control measure in real estate lending and investment. It involves an experienced, independent professional who assesses the original appraisal report without re-inspecting the property. This review focuses on verifying data accuracy, appraisal methodology, market analysis, assumptions, and regulatory compliance—including adherence to the Uniform Standards of Professional Appraisal Practice (USPAP) and applicable federal and state guidelines, such as those detailed in the Interagency Appraisal and Evaluation Guidelines (OCC Bulletin 2010-42).
This process helps lenders mitigate risks by confirming that the property’s valuation is realistic and defensible, especially for commercial real estate loans, high-value transactions, or complex properties. The reviewer issues a report outlining any concerns, necessary adjustments, or validations of the original appraisal.
Typically initiated by lenders, external reviews ensure that appraisal reports meet stringent professional and regulatory standards, contributing to market stability and consumer protection. To streamline the process, providing comprehensive information to the original appraiser and engaging qualified appraisal professionals from the start is essential.
For related topics, learn more about Property Appraisal Review and Professional Appraisal Standards.
Sources:
- Interagency Appraisal and Evaluation Guidelines (OCC Bulletin 2010-42): https://www.occ.treas.gov/news-issuances/bulletins/2010/bulletin-2010-42.html
- Appraisal Institute: https://www.appraisalinstitute.org/
- Uniform Standards of Professional Appraisal Practice (USPAP): https://www.appraisalfoundation.org/uspap
- Federal Register on Interagency Guidelines: https://www.federalregister.gov/documents/2010/12/10/2010-30588/interagency-appraisal-and-evaluation-guidelines
For official regulatory details, see the OCC Bulletin 2010-42.
