Real estate inspection for real estate valuation

The EBA Guidelines on loan origination and monitoring refer to the requirements for the valuer as set out in the Article 208(3), point b, of Regulation (EU) 575/2013 and clarified in Q&A 1056 . In addition, the Guidelines on loan origination and monitoring set out specific guidance for the valuation of the collateral at the point of loan origination (Section 7.1) and guidance for internal and external valuers (Section 7.3 of the Guidelines). In particular, paragraph 209 of the Guidelines establishes that institutions should ensure that at the point of loan origination the value of the immovable property collateral is assessed by an internal or external valuer (that meets the requirements set out in Section 7.3) using a full visit with internal and external assessment of the property. Performing a valuation only based on the photographs, cannot be considered as meeting the requirements of having the full visit with internal and external assessment of the property. A derogation allowing for a desktop valuation of the immovable property collateral supported by advanced statistical models (i.e., without full visit with internal and external assessment of the property) is explained in paragraph 210 of the Guidelines. With respect to the organisation of the valuation process, the Guidelines do not prescribe any specific process, which allows institutions and valuers to organise themselves as long as the requirements of Article 208(3)(b) of Regulation (EU) 575/2013 and of the Guidelines are met. The valuer must remain responsible for the valuation, and the institution should critically review the valuation they receive from the valuer in accordance with paragraph 214 of the Guidelines.