William D. Gion, State-Certified General - Regent, ND
David P. Bloxham, State-Certified Residential - Omaha, NE
Robert L. Moorman, State-Certified General - Houston, TX
Tim J. Janssen, State-Certified General - Newton, IA
Brian T. Nelson, State-Registered - Sioux Falls, SD
Joel L. Tucker, State-Registered - Sioux Falls, SD
Brandon D. Kirk, State-Registered - Marshall, MN
Corey J. Kost, State-Certified General - Bismarck, ND
F. Nick Boutrous, State-Certified General - Bismarck, ND
Curtis Brooks, State-Registered - Yankton, SD
Erick L. Enloe, State-Certified General - Chicago, IL
Scott C. Siemens, State-Certified General - West Des Moines, IA
Gregg Neu, State-Certified General
Dennis Stebner, State-Licensed
For the period January 1, 2013 through November 12, 2013, the Department has initiated twelve complaint investigations and six upgrade reviews.
Complaints - Six closed and six pending.
Upgrades - One closed and five pending.
by Larry Disney
My first commandment for appraisers is: Know the truth and let the truth set you free. In this context, it means that you are in control of both the appraisal development and reporting. Therefore, let no person coerce, threaten or influence your objectivity, impartiality, or independence.
After that, and based on my 10 years' experience as Executive Director of the Kentucky Real Estate Appraisers Board, I have seen that the most common appraisal mistakes occur because of a failure to report credible assignment results. Here are six common appraisal mistakes and ways to avoid them. Value opinions may differ but the question is always: Is the report credible and defendable, no matter the value?
Mistake 1 - Failure on the part of the appraiser to recognize that he or she is a professional; therefore, having sole responsibility for knowing and understanding the requirements for developing and reporting a credible opinion of value. This means developing a credible and accurate Scope of Work, including knowing how long a report will take to complete competently and what fee is required to take the proper time to do the job right.
Mistake 2 - Failure to perform assignments ethically and competently. Being ethical and competent requires two different but necessary skill sets. An ethics violation is intentional. A violation of competency is usually not understanding or not knowing. Negligence and gross negligence typically happen due to a failure to thoroughly review the work. Review your work completely. Avoid boilerplate. That's how mistakes happen.
Mistake 3 - Failure to complete meaningful education that will enhance knowledge and understanding of the appraisal process. The best method for ensuring professional success is to continually diversify your practice. The best way to do this is to broaden your experience by learning and growing on a continuing basis. This opens new doors of opportunity which allows more opportunity to pick and choose assignments. Choice is good. Try to set aside time each month for professional development that exceeds your mandated continuing education hours. This includes gaining insights into professional appraisal practices as well as business strategies and the latest technology issues.
Mistake 4 - Failure to associate with peers on a regular basis. Too many appraisers fail to grow and develop because they work in isolation. Consider affiliating with a professional organization. Attend meetings of the appraiser regulatory agency in your state. Sign up to receive information from the Appraisal Foundation - these folks control your profession. Remain up-to-date on the work of the Appraisal Standards Board, Appraiser Qualifications Board and the new Appraisal Practices Board. Make comments on proposed changes to the Uniform Standards of Professional Practice when that is permitted. Comments are read and considered. Visit the Appraisal Subcommittee website regularly to review the latest information (ASC.gov).
Mistake 5 - Failure to identify an appropriate scope of work for each appraisal assignment. How do you combat this? Identify relevant characteristics; identify extraordinary assumptions and hypothetical conditions; disclose research and analyses performed and not performed; disclose significant real property appraisal assistance.
Another problem is failure to include a signed certification that includes the required information. Here are several examples of verbiage that can keep you out of trouble: I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.
Another is: I have (or have not) made a personal inspection of the property that is the subject of this report. (If more than one person signs this certification, the certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraised property.)
And another is: No one provided significant real property appraisal assistance to the person signing this certification. (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.) Assistance must be noted in the certification by name, and include a list within the body of the report of each step completed, if the person does not sign the report.
Mistake 6 - Failure to identify and understand applicable client conditions for each assignment. This problem is solved by knowing, understanding and following the various professional guidelines, such as: The Interagency Appraisal and Evaluation Guidelines; Fannie Mae Selling Guidelines and FHA Requirements. And in allocating value contributions: Real Property STD 1 & 2, Personal Property (FF&E) STD 7 & 8 and Business STD 9 & 10.
About the Author
Larry Disney began appraising in 1977. He has been an investigator with the Kentucky Appraisal Board since 1999 and the Executive Director since 2003. Mr. Disney can be reached at email@example.com.
Issue Date: October 9, 2013
Note: This is a special edition of USPAP Q&A intended to address some questions associated with the 2014-15 edition of USPAP, which is effective January 1, 2014 through December 31, 2015. The following Q&A apply to the 2014-15 edition of USPAP only. They do not apply to the 2012-13 edition.
The responses to the following questions may be found at The Appraisal Foundation website (www.appraisalfoundation.org).
1. What will be changing in the 2014-15 edition of USPAP?
2. Effective January 1, 2014, what are the changes to reporting standards
for real property and for personal property appraisal assignments?
3. What are the requirements for each report format under STANDARD 2 and
4. When is it appropriate to use the Appraisal Report option?
5. When is it appropriate to use the Restricted Appraisal Report reporting
option in an appraisal assignment?
6. Does the decision to use an Appraisal Report, a Restricted Appraisal
Report, or an oral appraisal report impact the scope of work for an
7. Several of the required items for an Appraisal Report and a Restricted
Appraisal Report differ by the use of the terms "summarize" versus
"state." What is the difference?
8. What are the workfile requirements for an assignment with a Restricted
Appraisal Report? Is there any additional information required to be in the
workfile when comparing an assignment with an Appraisal Report to an
assignment with a Restricted Appraisal Report?
9. If a Restricted Appraisal Report includes the rationale for how the appraiser
arrived at the opinions and conclusions may the appraiser exclude the required warning?
10. A client asked me to communicate an appraisal using a particular form that
is prominently labeled "Summary Appraisal Report." Is it acceptable to
communicate an appraisal using this report label since a Summary
Appraisal Report is no longer referenced in the 2014-15 edition of USPAP?
11. A Restricted Appraisal Report must include the following statement "that
the rationale for how the appraiser arrived at the opinions and conclusions
set forth in the report may not be understood properly without additional
information in the appraiser's workfile." Standard Rules 2-1, 8-1 and 10-1
state "Each written or oral... appraisal report must: (b) contain sufficient
information to enable the intended users of the appraisal to understand the
report properly." Is this an inconsistency?
*Opening and printing Adobe .pdf files requires Adobe Acrobat Reader. Click here as needed to download the free Adobe Acrobat Reader.