Existing loan for $1.7 million for 1,700 or so acres - no egress. Trading 2,000 acres of current land for 2,000 acres of new land to obtain egress - has some improvements and will need loan to pay additional $170,000 for the swap and to build the road. Does the new loan require an appraisal on the new 2,000 acres?

Just to clarify: Is the 2,000 acres being traded include all the 1,700 collateral currently securing your loan? So you would be releasing your 1700 acres and replacing with 2,000 acres with egress and improvement and building a new road?

I'm sorry; I have numbers wrong. We will be releasing 2,000 acres from "2,000 + bunches" of acres; replacing those 2,000 acres with a different 2,000 acres (on the other side of the parcel so a road can be cut through it to the main thoroughfare). The total of acreage will remain the same......just "bunches" + 2,000 different acres. Does that clarify enough?

Not everyone will agree with me and I'll be interested to hear their views.

I'd have to go with some common sense here before you order an appraisal costing many thousands of dollars. I can tell you that I've worked closely with our regulators (OCC) and our loan review team (all being ex-OCC) alot in the last couple of years on appraisals and they tell me the same thing.

It depends on your existing appraisal, the comps used, is there a change in income production or changes in the area?

There is a difference in using an existing 5 month appraisal and 55% Loan to Value for exchange of almost like-kind collateral. If you are working with a 26 month appraisal on 80% loan to value and the improvements are different you will want to get a new appraisal. Its a good thing if you can paper-up your existing appraisal documenting auction price and land sales in the immediate area to substantiate the values given in your existing appraisal.

No one wants a customer to fork over many thousands of dollars when a bank can intelligently document why the current appraisal is useful and valid and show the whys.

I would hate to have a $2MM loan on the books support by an appraisal on the property next door. I think it is going to be a hard sell with the regulators.

I would have to agree with Mr. Carey. Two thousand acres is a lot of land and there will be differences in the value. Part of the new tract may be unusable for construction. The new tract has in/egress where the old tract does not, so the values are different.

Why set yourself up for criticism?

I agree with the previous points of view. If the land is different (uses, changes in the market, age of existing appraisal, improvements to or lack thereof, change in potential income....) you would want a new appraisal. My earlier comment about not getting a new appraisal revolved around if you have already have a newer appraisal and you are changing 2000 acres of IDENTICAL land in an area that is well know to the lending staff and you can provide stats of current sales and/or auction prices in the surrounding area to sufficiently document the file.