Department of Labor and Revenue

Title - South Dakota Appraiser Certification Program

News Articles - December 2011

Appraiser Certification Program Mission, Purpose and Intent

Appraiser Certification Program Advisory Council

New Licensees - October/November 2011

Information Regarding Disciplinary Actions

Anonymous Complaints

Review of Cases - January 1, 2011 through December 8, 2011

Upgrades - September 27, 2011 through December 8, 2011

Reminder - Seven-Hour National USPAP Update Course
Completion Requirements

Revisions to USPAP and USPAP Advisory Opinions

Appraisal Management Companies to be Registered and Supervised in South Dakota

State-Licensed Appraisers Required to Verify 2000 Hours of Experience

Mother Nature at Her Worst

Appraiser Certification Program Mission, Purpose and Intent

Program was implemented July 1, 1990, pursuant to enactment of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) by Congress. The mission of the Program is to certify, license and register appraisers to perform real estate appraisals in the state of South Dakota pursuant to Title XI (FIRREA). The purpose of the Program is to examine candidates, issue certificates, investigate and administer disciplinary actions to persons in violation of the rules, statutes and uniform standards, and approve qualifying and continuing education courses. Title XI intends that States supervise all of the activities and practices of persons who are certified or licensed to perform real estate appraisals through effective regulation, supervision and discipline to assure their professional competence.

back to top


Appraiser Certification Program Advisory Council


Council members provide recommendations to the Secretary of the Department of Labor and Regulation in the areas of program administration in order to sustain a program that is consistent with Title XI. The Council meets quarterly in public forum. See our Advisory Council Web page for meeting information.

back to top

New Licensees - October/November 2011

Fred M. Preator, State-Registered – Sioux Falls, SD
Jennifer M. Pedersen, State-Certified Residential – Rock Rapids, IA
Carrie A. Mann, State-Certified General – Bismarck, ND
Lisa D. Stratmeyer, State-Registered – Worthing, SD

back to top

Information Regarding Disciplinary Actions

Public information regarding disciplinary action taken against an appraiser is available upon written request to:

Department of Labor and Regulation

Appraiser Certification Program

445 East Capitol Avenue

Pierre, SD 57501

or email Sherry.Bren@state.sd.us.

Include in the request for information the name of the appraiser and the appraiser's city and state of residence. (Disciplinary action may include denial, suspension, censure, reprimand, or revocation of a certificate by the department.) (Administrative Rule of South Dakota (ARSD) 20:14:11:03)

The following disciplinary action has been taken by the Department of Labor and Regulation, Appraiser Certification Program:

Kim M. Doney, Box Elder, South Dakota – Complaint Case # 10-378. The Department of Labor and Regulation entered an Order revoking the State-Licensed Appraiser Certificate of Kim M. Doney effective November 29, 2011 for violations of ARSD 20:14:06:01 (violation of the Uniform Standards of Professional Appraisal Practice, Standard 1 and 2).

back to top

Anonymous Complaints

ARSD 20:14:11:01.01. Anonymous complaints. Initiation of an investigation may be commenced upon receipt of an anonymous complaint if it meets the following criteria:

  1. The allegations of violations of any provision of this article are considered credible and based upon factual information which is independently verifiable; and
  2. The complaint is accompanied by a copy of the appraisal report or other documents which contain clearly identifiable errors or violations of the provisions of this article.

back to top

Review of Cases - January 1, 2011 through December 8, 2011

For the period January 1, 2011 through December 8, 2011, the Department has received six upgrade applications and initiated 21 complaint investigations.

Upgrades – Four upgrades issued and two upgrades pending.

Complaints – Three complaints dismissed, one temporary permit application withdrawn, one temporary permit application denied, and sixteen complaints pending.

back to top

Upgrades - September 27, 2011 through December 8, 2011

Craig Steinley, State-Certified General

back to top

Reminder - Seven-Hour National USPAP Update Course
Completion Requirements

Pursuant to Administrative Rule of South Dakota (ARSD) 20:14:13:01 an applicant for renewal of a certificate or license must successfully complete the most current edition seven-hour National Uniform Standards of Professional Appraisal Practice Update course prior to June 30 of each even-numbered year.

South Dakota state-registered, state-licensed, state-certified residential and state-certified general appraisers must complete the 2012-2013 Edition of the 7-Hour National USPAP Update Course prior to June 30, 2012. (Certified or licensed appraisers by reciprocity should review the administrative rules regarding continuing education requirements for reciprocal appraisers found in ARSD 20:14:13:01.01(3)).

back to top

Revisions to USPAP and USPAP Advisory Opinions
(Effective January 2012)

After the publication of the 2010-11 edition of USPAP, a series of five exposure drafts were released to obtain feedback on possible modifications for the 2012-13 edition. On April 8, 2011, the Appraisal Standards Board (ASB) approved and adopted modifications to the 2012-13 edition of the Uniform Standards of Professional Appraisal Practice (USPAP). These modifications include:

  1. Revisions to DEFINITIONS of “Client,” “Extraordinary Assumption,” and “Hypothetical Condition,” as well as moving the definition of “Exposure Time” from STATEMENT ON APPRAISAL STANDARDS NO. 6 (SMT-6) to the DEFINITIONS section – The definition of client was revised to further clarify the proper application of the term client and to facilitate in the proper identification of the Client in assignments. Adding the concept of the effective date of the assignment results to the definitions of Extraordinary Assumption and Hypothetical Condition will reduce misunderstanding and misapplication of both terms. The definition of Exposure Time has been moved from SMT-6 to the DEFINITIONS section which will enhance the usability of USPAP.
  2. Creation of a new RECORD KEEPING RULE and Related Edits to the conduct Section of the ETHICS RULE – The Board heard concerns about the location of record keeping requirements within the ETHICS RULE. After exposing the concept of moving record keeping into a separate rule, it was determined that record keeping should be a separate Rule. However, a provision was added to the ETHICS RULE so that anyone who willfully or knowingly violates the RECORD KEEPING RULE is also in violation of the ETHICS RULE.
  3. Revisions Relating to Development and Disclosure of Exposure Time Opinion – In order to assure that intended users understand the context in which the opinion of value is developed, the Board has adopted revisions to make it a clear requirement that reasonable exposure time must be reported in all assignments in which an opinion of reasonable exposure time must be developed. As clarified in the 2012-13 edition of USPAP, exposure time must be developed “When exposure time is a component of the definition for the value opinion being developed.”
  4. Revisions to Standards Rule 2-3, 3-6, 5-3, 6-9, 8-3 and 10-3 (signed certification statement) – The 2010-11 edition of USPAP initiated the requirement to disclose any services regarding the subject property performed by the appraiser within the prior three years in the report certification. Another requirement of USPAP is the appraiser must disclose in the certification either the presence or absence of any current or prospective interest regarding the subject or the parties involved. To improve consistency, for the 2012-13 edition of USPAP the Board is requiring that prior service(s) regarding the subject property be treated similarly in the certification as current/prospective interests are treated.
  5. Revisions to STANDARDS 7 and 8: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT and REPORTING – The changes to STANDARDS 7 and 8 were, in large part, the result of the work of an appointed task force made up of personal property appraisers. It had been several years since a comprehensive review had been made of STANDARDS 7 and 8, and after a thorough review, the task force made numerous recommendations to the Board, most of which were adopted by the Board.
  6. Revisions to Advisory Opinion 21, USPAP Compliance – The revisions to Advisory Opinion 21 were made in response to questions and concerns from appraisers, appraisal clients and state appraisal regulatory officials. Advisory Opinion 21 (AO-21) contains a series of questions with responses along with illustrative examples. The illustrations in AO-21 were reviewed and updated or replaced as necessary to provide relevant guidance regarding when USPAP applies.

Administrative edits were also made to USPAP and all guidance material, including the USPAP Advisory Opinions and USPAP Frequently Asked Questions, for conformity and consistency. The details of the changes to the 2012-13 edition of USPAP can be read on the Appraisal Foundation’s website, www.appraisalfoundation.org in a document entitled 2011 Summary of Actions Related to Proposed USPAP Changes.

back to top

Appraisal Management Companies to be Registered - Registration Number to be Disclosed

Pursuant to South Dakota Codified Law (SDCL) 36-21D Appraisal Management Companies are to be registered in the State of South Dakota. There are currently 51 Appraisal Management Companies (AMCs) registered with the Appraiser Certification Program. The roster of registered AMCs is now available online in Adobe .pdf format*.

An AMC is required by Administrative Rule of South Dakota (ARSD) 20:77 to disclose its certificate of registration number within its engagement document with each utilized appraiser. Effective in January, an appraiser is required, pursuant to ARSD 20:14 to assure that the AMC is properly registered before accepting an appraisal assignment and include the company’s registration number in the appraisal report.

If an appraiser is unable to verify an AMC requesting appraisal services on the AMC Roster available on the website, the appraiser is advised to report the Company to the Appraiser Certification Program.

Department of Labor and Regulation

Appraiser Certification Program

445 East Capitol Avenue

Pierre, SD 57501

or email Sherry.Bren@state.sd.us.

back to top

State-Licensed Appraisers Required to Verify 2000 Hours of Experience

South Dakota will, effective in January, begin requiring any individual applying for a State-Licensed Appraiser Certificate to verify 2,000 hours of acceptable appraisal experience. The Appraisal Subcommittee issued Bulletin No. 2011-01 on March 18, 2011, advising State Appraiser Regulatory Officials on compliance of certain provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

One of the provisions that affects appraisers under the jurisdiction of the South Dakota Appraiser Certification Program concerns mandatory Appraiser Qualifications Board (AQB) Criteria for credentialing of State licensed appraisers. Specifically, the requirement that only AQB-compliant appraisers are eligible to perform appraisals for federally related transactions (FRTs).

Pursuant to the Bulletin, for a State licensed appraiser to be eligible to perform appraisals for FRTs and remain on the National Registry with an active status, the appraiser must satisfy the minimum 2,000 hours of appraisal experience. The administrative rules regarding appraisers have been amended to require an applicant for State-Licensed Appraiser classification to verify 2,000 hours of appraisal experience.

If you have any questions, please feel free to contact the Appraiser Certification Program at 605.773.4608.

back to top

Mother Nature at Her Worst

(Reprinted with permission from the Appraisal Institute. The article was originally published in the Third Quarter 2011 issue of Valuation magazine.)

By Morgan McDowell

Earthquakes, hurricanes, floods and fires can destroy homes and businesses in a matter of seconds, forcing appraisers to work under extraordinary circumstances for months or years to help communities rebuild. Three appraisers share their experiences working in the aftermath of some of the country’s worst disasters.

You Can Say 2011 Started with a Bang

First, a record-breaking blizzard blanketed the Midwest in early February; then a spate of tornadoes wreaked havoc across the Midwest and the Southeast in April and May, followed by massive flooding along the Mississippi River. More recently, an outbreak of wildfires devastated parts of the Southwest and California.

And those catastrophes are limited to the U.S.; worldwide we’ve seen a volcanic eruption in Chile; a major earthquake and subsequent tsunami in Japan; and earthquakes in South America, Iran and New Zealand, to name a few. The turbulent first half of 2011 begs the question: How does the aftermath of natural disasters affect the appraisal world?

Large geographic areas are impacted, and the number of properties that suffer damage quickly add up. Property owners, mortgage lenders, insurance agencies – basically anyone with an economic stake – all depend on real estate appraisers to give them a number, and to give it quickly.

But it’s not that simple.

It can take several years for appraisers to assess the impact of large-scale events, so while we don’t yet know how appraisers will be affected by this year’s calamities, we can learn from appraisers who had assignments following such disasters as the Northridge, Calif., earthquake (1994), Hurricane Katrina (2005), the California Station Fire (2009) and the Nashville flood (2010).

back to top

Business Rollercoaster

Appraisers often see both positive and negative effects on their businesses following a natural disaster. Immediately afterward, appraisers typically see their business drop off because potential clients are trying to get their bearings and decide next steps. After the initial chaos and confusion settles down, appraisers often see a dramatic increase in business.

When Nashville experienced more than 13 inches of rain over two very wet days in 2010, the area’s lakes overflowed dams and the rivers exceeded a 500-year floodplain. The massive Gaylord Opryland Resort and Convention Center and nearby Opry Mills shopping mall were under several feet of water, and up to five blocks of the city’s downtown historic district flooded.

“There were over 11,000 properties affected by the floods, and all had become potential appraisal assignments,” says James Atwood, SRA, of Nashville-based appraisal firm James B. Atwood, Inc. He personally appraised dozens of homes and condominiums while they still had several feet of standing water inside.
“The initial response for all of us was shock and sorrow for all those affected,” Atwood says. “However, as time passed, members of the Nashville community rallied to help one another, shock gave way to productivity and the community moved to restore itself. Appraisers can contribute to the rebuilding of lives, homes and businesses while simultaneously increasing their own professional productivity.”

However, the uptick in business is usually temporary, which, due to the circumstances, appraisers are generally happy about. “Eventually, and thankfully, life gets back to normal and the need for specialized disaster appraisal services goes away,” Atwood says.

back to top

The Volatility of Aftermath Appraisals

An area that has experienced the upheaval of a natural disaster has diverse appraisal needs. In some cases, appraisers are called on to determine buyout prices for properties located in designated floodways that are being purchased with government funds, which is what occurred in Nashville and along the Gulf shore following Hurricane Katrina. Other times, appraisers offer forecasts and market research. In all situations, their work following destructive events can be highly volatile.

When appraisers work on behalf of property owners, their jobs often involve determining assessed value just prior to and just after an event in order to prove property loss for tax and insurance purposes. Unfortunately, in instances of widespread damage involving numerous cases, tax and insurance disputes can be commonplace.

Doug Singletary, Jr., SRA, of Gulfport, Miss.-based appraisal firm Doug Singletary & Associates, says that this issue “was common after Katrina as insurance companies tried to get out of paying claims, asserting that the flood caused the damage, when, in fact, it was wind-driven water from a hurricane, which are two different issues.”

Singletary personally witnessed complete property destruction, mostly the result of the massive rush of water driven almost a quarter mile inland by Hurricane Katrina’s 175-mph winds. It’s estimated the hurricane destroyed more than 300,000 homes and business and accounted for $96 billion in damage.

Steve Norris, MAI, of Pasadena, Calif.-based appraisal firm Norris Realty Advisors, also witnessed massive destruction – and squabbling – following the Northridge earthquake in 1994. The 6.7-magnitude quake caused an estimated $20 billion in damage, making it one of the costliest natural disasters in U.S. history.

Norris appraised many commercial properties following the earthquake and saw instances in which the owners/lenders of damaged properties tried to get out of paying for repairs, or tried to write off buildings as total losses because they were unable to rent them out. He often appeared in court to provide opinions during trials about the future income of properties.

“The physical damage that occurs after an earthquake is immediate. The long-term damage happens in litigation,” Norris says.

back to top

Risky Business

The sheer mass of land and property affected by natural disasters, and the level of destruction they cause, have created many obstacles for appraisers. Often, the data and processes they typically use in the course of their jobs are unavailable or not applicable following a devastating event.

“One of the greatest challenges is providing an ‘as is’ or ‘after’ disaster value because of the lack of comparable sales,” Atwood says. “The appraiser must become more proficient in developing an opinion of value that depends on measuring the costs to repair the property, measuring any loss of utility, and measuring a risk incentive that would account for all uncertainties involved in purchasing a property damaged by a disaster.” This can be tricky because it relies on what is essentially hypothetical data.

Another very real obstacle is simply gaining access to the property. Norris recalls the numerous collapsed freeways around Southern California following the Northridge earthquake that made travel difficult, if not impossible. Similarly, Singletary faced road blocks and razor wire around some of the hardest hit areas following Hurricane Katrina. Additionally, he faced martial law in some areas, as well as widespread criminal activity.

Another obstacle that appraisers face is in effect being asked to cut corners. When appraisers are retained by lenders to assess property damage, the assignments often require deep investigation, but time for that amount of due diligence is usually painfully short. In some cases, in the interest of time or a desire for a report of “no damage,” appraisers are pressured by lenders to do a “drive-by” appraisal to gauge surface damage, which, in most cases, does not tell the whole story.

Stephanie Coleman, MAI, SRA, senior manager, ethics and standards counseling at the Appraisal Institute, says, “Appraisers need to be sure they have the competency level required to assess damage, if that is what they are being asked to do.” Appraisers who report on damage without the necessary background knowledge could be in violation of the Uniform Standards of Professional Appraisal Practice, and would then be liable in any disputes. The Appraisal Institute has issued a Guide Note, offering advice on best practices for appraisers in this situation.

Norris echoes Coleman’s warning: “It is helpful to create a network of trained professionals to accompany you to provide additional professional opinions, such as engineers to conduct structural analysis or attorneys who understand the effects of structural defects on litigation issues. You’re not serving your client if you do not get a full picture of the impact on value.”

Norris says that following the 2009 Station Fire that burned 160,577 acres and destroyed 209 structures – making it the largest and deadliest of the 2009 California wildfires – he received several calls from people claiming to be “insurance specialists” who were engaging individual homeowners to file mass claims on fire damage. They were looking for an appraisal firm to do anywhere from 10,000 to 20,000 “before and after” appraisals in a short period of time, simply to validate their claims that the damage was real. Norris declined the offer and recommends that when appraisers engage with a company they don’t know, they should get qualifications, ask the right questions and pay attention to warnings from law enforcement.

back to top

Personal Connection

Appraising in the aftermath of a natural disaster often takes a personal toll. By nature of the profession, appraisers themselves are usually part of the community in which they’re assessing disaster damage and have often suffered their own losses. “Many local appraisers, myself included, as well as banks and mortgage companies, personally experienced damage or had their offices and computers and files destroyed,” Singletary says.

Often, clients – who can very well be friends – have not only lost homes and buildings but entire livelihoods. Others have lost loved ones. As such, it’s important for the appraisers to respect the emotional state and needs of their clients and to keep their own emotions in check.

“The most disturbing aftermath of a natural disaster of this magnitude, other than the loss from the storm, is that many people never recovered from their personal loss, and subsequently died, either directly or indirectly from the disruption of life,” Singletary says. “For example, many older people lost homes that they had lived in their entire adult lives, and essentially gave up after losing everything. Although there is almost always more work for the appraiser after a disaster, from a personal standpoint, there is no amount of financial gain that is worth the personal loss in such a setting.”

back to top


 


Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184