De Minimis Threshold
The transaction value below which a federally related real estate transaction does not require an appraisal by a licensed or certified appraiser. Currently set at $400,000 for most residential transactions.
Transactions below the de minimis threshold may use an evaluation (a less rigorous valuation) instead of a full appraisal. The threshold was raised from $250,000 to $400,000 in 2019 by federal banking regulators. This change was controversial in the appraisal industry as it reduced the number of transactions requiring appraisals. The threshold does not apply to FHA or VA loans, which always require appraisals regardless of value. Evaluations must still be performed by individuals with market knowledge but do not require state licensing.
Related Terms
FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act)
FIRREAThe 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..
Evaluation
A valuation of real property that does not require a state-licensed or certified appraiser, permitted for federally related transactions below the de minimis threshold.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
More in Legal & Regulatory
View allUniform Standards of Professional Appraisal Practice (USPAP)
USPAPThe nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
Appraiser Independence
The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome.
Competency Rule
A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment..