NOVEMBER 19, 2025 – The Appraisal Institute’s latest Valuation magazine had an article on Validations and fee appraisers providing this service. For 20 years, I tried to convince fee appraisers to do Evaluations. They opposed such and fought against state laws being passed to allow non-USPAP Evaluations. Finally, around 2015, they saw the light and Evaluations are a common product that financial institutions outsource to AMCs and appraisers.
It is now 30 years since I drafted a Validation report. I waited until Evaluations had become commonplace before I brought up this final product that fee appraisers can provide. Below is my post from 2020. My forecast that Validations will become the next product for fee appraisers to provide is coming true.
In 2020, I wrote an outline for a Seminar on Validations (4 hours). I redesigned my Validation report for staff appraisers. I have not designed the Validation report for fee appraisers, yet. But, can do that in an hour or two when needed.
I am not up for putting the meat on the bones for my Seminar. IF YOU WOULD LIKE TO WORK WITH ME TO WRITE THE SEMINAR AND MARKET IT, PLEASE CONTACT ME. NO NEED FOR THE WORLD TO WAIT FOR THE APPRAISAL INSTITUTE TO COME OUT WITH SOMETHING. And I doubt anyone else in the country has been performing Validations since 1994 other than me:) I am also the only person to co-write two articles solely about Validations that were published in The RMA Journal.
Happy Thanksgiving.
The Mann
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MAY 29, 2020 – Validations are the little known and little used product that get overlooked in the world of Appraisals and Evaluations. The December 2010 Interagency Appraisals and Evaluations Guidelines (IAEG) document has the following section that addresses Validations:
XIV. Validity of Appraisals and Evaluations
The Agencies allow an institution to use an existing appraisal or evaluation to support a subsequent transaction in certain circumstances. Therefore, an institution should establish criteria for assessing whether an existing appraisal or evaluation continues to reflect the market value of the property (that is, remains valid). Such criteria will vary depending upon the condition of the property and the marketplace, and the nature of the transaction. The documentation in the credit file should provide the facts and analysis to support the institution’s conclusion that the existing appraisal or evaluation may be used in the subsequent transaction. A new appraisal or evaluation is necessary if the originally reported market value has changed due to factors such as:
Passage of time.
Volatility of the local market.
Changes in terms and availability of financing.
Natural disasters.
Limited or over supply of competing properties.
Improvements to the subject property or competing properties.
Lack of maintenance of the subject or competing properties.
Changes in underlying economic and market assumptions, such as capitalization rates and lease terms.
Changes in zoning, building materials, or technology.
Environmental contamination.
Validations answer one simple question – is the value of the real estate collateral equal to or greater than the value in a prior Appraisal or Evaluation? If so, then that value can be brought up to today. If not, then a new Appraisal or Evaluation is needed.
Validations are useful in level to rising markets. They are not very useful in the current market conditions.
However, not all property types have experienced a value decline this year. In general, industrial properties and national tenant leased properties where the tenant has a bond rating A and above, are still candidates for Validations. Apartments might be depending on the age of the prior Appraisal or Evaluation and the property location.
I have updated the Validation Report that I originally developed in 1994. This report is intended to be used by internal bank employees. It is not for use by fee appraisers, as it does not comply with USPAP. If you are a bank employee and want a copy of my report template, just email me at GeorgeRMann@Aol.Com. I will send it to you for free:)
It took me 25 years to finally get Evaluations to be mainstream. Validations are next. They are under utilized. Albeit, today’s market is not ideal for them. But, we will get back to market conditions where they are useful again. My plan is to design a Restricted Appraisal Report (RAR) specific to the Validations need for fee appraisers to use. But, at this time, this is not needed for the most part.
Again, bank staff please contact me if you want a copy of my template.
