Is your valuation an appraisal?
No. The valuation from Bowman Real Estate is a real estate licensee's opinion of value. Virginia lets only people licensed or certified by the Real Estate Appraiser Board use the word appraisal, and it bars a licensee's valuation for a fee from being called an appraisal or used in place of one. A lender that needs an appraisal orders it from a licensed appraiser; some transactions use an evaluation instead.
Two defined words, one of them reserved to licensed appraisers, and the one this office uses
Virginia's appraiser chapter defines both words, and it restricts who may use one of them. One is a valuation. The other is an appraisal. What this office hands back to an owner is called a valuation, never an appraisal.
The definitions sit together in Va. Code 54.1-2009. A valuation is the plainer of the two:
A "valuation" is an estimate of the value of real estate or real property.
Va. Code 54.1-2009
An appraisal is defined more broadly, as an analysis, opinion or conclusion about the nature, quality, value or utility of specified interests in identified real estate. The glossary entry for appraisal carries the definition in full. What matters here is a sentence a few lines further into the same definition, which decides who may use the word at all:
The term "appraiser" or "appraisal" may be used only by a person licensed or certified by the Board.
Va. Code 54.1-2009
The Board is the Real Estate Appraiser Board. Lowell is a Virginia real estate salesperson, and the number he returns in that role is an estimate of value that this office calls an opinion of value: a figure, and the reasons for it. It is an estimate, not an exact figure.
The exemption for a licensee's valuation for a fee comes with three limits
Virginia makes appraising for compensation a licensed activity, then exempts certain people from its appraiser chapter. One exemption covers a licensed real estate broker or salesperson who, in the ordinary course of business, provides a valuation or analysis of real estate for a fee.
That licensing rule is Va. Code 54.1-2011, and the exceptions written into it are listed in the glossary entry for appraisal.
That exemption, Va. Code 54.1-2010 A 1, comes with three limits: the licensee shall not hold himself out as a real estate appraiser; the valuation shall not be referred to as an appraisal; and it "shall not be used in lieu of an appraisal performed by a licensed appraiser." The full text of that subdivision is quoted on the free valuation page, and this page does not repeat it.
The subdivision names a licensed broker or salesperson without saying which party the licensee works for, so its words read the same for a seller's licensee and for a licensee acting under buyer agency.
What makes a document an appraisal in Virginia is the license behind it and the standard it follows
An appraisal is not a longer or more careful valuation. It is a regulated product, and its rules start with who prepares it.
Virginia's appraiser regulations require every licensee developing a real property appraisal to follow the Uniform Standards of Professional Appraisal Practice, and the statute limits who may prepare and sign one. Those rules, including the exceptions for a supervised assistant and a registered firm, are laid out in the glossary entry for appraisal.
Some loans need no appraisal, and under one federal rule the lender obtains an evaluation instead
It is easy to say that every lender orders an appraisal. The rules are narrower than that, and none of them turns a licensee's opinion of value into the lender's document.
Virginia's appraiser chapter defines a third document, the evaluation: an opinion of the market value of real property that may be used in a real estate-related financial transaction where an appraisal by a state-certified or state-licensed appraiser is not required by the regulatory agency over that transaction or that lender.
One federal version of that situation is written into 12 CFR 34.43, the rule of the Office of the Comptroller of the Currency for the institutions it regulates. It requires an appraisal by a state certified or licensed appraiser for real estate-related financial transactions, with listed exceptions. One exception is a residential real estate transaction, meaning one secured by a single 1-to-4 family residential property, with a transaction value of $400,000 or less. For that exception and several others, the institution must obtain an appropriate evaluation consistent with safe and sound banking practices, and the OCC reserves the right to require an appraisal whenever it believes one is necessary for safety and soundness.
A broker price opinion and a market analysis both fall short of an evaluation
If an opinion of value cannot be an appraisal, the next question is whether it could at least serve as the lender's evaluation. The 2010 Interagency Appraisal and Evaluation Guidelines answer that for the two products closest to it.
The Guidelines describe a broker price opinion as an estimate of the probable sales or listing price provided by a real estate broker or sales agent, and they rule it out as an evaluation because, among other things, it gives a sales or list price rather than a property's market value. Their own words on both points are in the glossary entry for broker price opinion.
The Guidelines treat broad market information the same way: a competitive market analysis, in their term, lacks the property-specific information an evaluation needs and would not be acceptable as one. The trade term comparative market analysis, which neither Virginia's brokerage statutes nor its Real Estate Board or Appraiser Board regulations define, is covered under comparative market analysis.
Put together, the answer to the page's question has three layers. A licensee's valuation is not an appraisal, because Virginia says so and reserves the word. It cannot stand in for one, because the same exemption says that too. And a price opinion or market analysis from a licensee is the kind of product the federal Guidelines keep out of the evaluation role as well.
Want an opinion of value on the property, with its limits stated plainly?
Send the parcel and what the number is for. The answer is a licensee's opinion of value with the reasons for the figure, and it is never an appraisal. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
What is the difference between an appraisal and an evaluation?
An appraisal is the product Virginia reserves to people licensed or certified by the Real Estate Appraiser Board, developed under the Uniform Standards of Professional Appraisal Practice. An evaluation, as Va. Code 54.1-2009 defines it, is an opinion of market value that may be used in a real estate-related financial transaction where the lender's regulator does not require an appraisal by a state-certified or state-licensed appraiser.
Can a consultant's valuation of land or timber be used to get a loan?
Not under the consulting exemption. Va. Code 54.1-2010 A 3 exempts a person who, in the ordinary course of business, provides consulting services or consultative brokerage for a fee, which may include a valuation of real estate or standing or severed timber, provided the services are not referred to as an appraisal and are not used in connection with obtaining a loan to finance or refinance real property or timber, or with any federally related transaction.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 54.1-2009, definitions for real estate appraisers (appraisal, valuation, evaluation, appraisal report) Virginia General Assembly
- Va. Code 54.1-2010, exemptions from the appraiser chapter Virginia General Assembly
- Va. Code 54.1-2011, necessity for an appraiser license Virginia General Assembly
- 18VAC130-20, Real Estate Appraiser Board regulations (full chapter) Real Estate Appraiser Board
- 12 CFR 34.43, appraisals required; transactions requiring an evaluation Office of the Comptroller of the Currency (eCFR)
- 12 CFR 34.42, definitions, including residential real estate transaction Office of the Comptroller of the Currency (eCFR)
- Interagency Appraisal and Evaluation Guidelines (2010) Federal Register