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On purpose: SBA issues revised appraisal policies.

The U.S. Small Business Administration on May 1 issued revised appraisal policies for change-in-ownership transactions involving special-purpose properties. The SBA removed requirements for business valuation credentials and repositioned such scenarios as real property-centric valuation scenarios.

The revised policies are found in Standard Operating Procedure 50 10 5(H) and take immediate effect.

Under the revised policies, a lender must obtain an independent appraisal performed by a certified general real property appraiser who has experience appraising the specific business property type in question in transactions where a loan financing the acquisition is more than $250,000, or when there is a close relationship between the buyer and the seller and the business operates from a special-purpose property.

Specifically, the going concern appraisal experience requirement stipulates that a real estate appraiser must have completed within the last 36 months at least four going concern appraisals of special-use property equivalent to the property being appraised.

Under SOP 5010 5(H), a special-purpose property is defined as a limited-market property with a unique physical design, special construction materials or a layout that restricts its utility to the specific use for which it was built, largely conforming to the definition found in the Dictionary of Real Estate Appraisal, 5th Edition. Examples include car washes, hotels, gas stations (with or without a convenience store), golf courses, medical facilities and bowling alleys.

Read a summary of the SOP 50 10 5(H) changes at default/files/sops/ S0P_50_10_5_H_FI"IAL_ FINAL_CLEAN_4-30-15_ Not_Protected.pdf

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Title Annotation:UP FRONT: Headlines and updated from the appraisal world
Publication:Valuation Magazine
Date:Mar 22, 2015
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