PROVIDENCE – For the first time in a quarter century, federal banking regulators are raising the minimal price for requiring appraisals on home sales.
Beginning in January, the price threshold for appraisals on residential real estate transactions will be raised to $400,000 from $250,000, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency jointly announced Sept. 27.
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The last time the threshold was raised was 1994. Officials estimated that raising the bar to $400,000 would increase the total dollar volume of residential real estate transactions that are exempt from appraisals to 35% from 21%.
“In determining the level of increase, the agencies considered increases in housing prices and general inflation across the economy since the current threshold was established in 1994,” officials said.
Although appraisals will no longer be required for housing sales below $400,000, lenders still can call for one to be done in such cases, an FDIC spokeswoman noted.
In proposing the increase in the appraisal threshold, regulators said they considered the increased use of evaluations would likely reduce the time and costs associated with certain residential real estate transactions and, in turn, would reduce the burden for financial institutions and consumers.
Data indicate that raising the threshold “will lead to cost savings for consumers and institutions,” officials said. “Staff also conclude that raising the threshold is likely to reduce the time needed to find appropriate personnel to perform the evaluation, particularly in areas experiencing shortages of certified or licensed appraisers, as well as the time needed to review the evaluation.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
