When is an Appraiser Not an Appraiser?

With an influx of alternative valuation products now being offered to appraisers, I am often asked which of these assignments can be done by appraisers and which should be avoided.  I am not a USPAP instructor, a lawyer, or a specialist in your individual state’s law, but I will give you the answer as I understand it (I am not responsible for your individual compliance to USPAP, the law, and blah blah blah).

First, an analogy is in order.  Imagine you are a spectator at a sporting event.  Sitting next to you is your buddy who asks you about a certain call the referee just made.  Though you might offer him your version of what happened, nobody would give much credence to what you say because you are not an expert.  It is just your opinion.   As you are walking from the stadium, the lady in front of you suddenly grips her left arm and falls to the ground.  Immediately, you spring to action, diagnose her with a heart attack, and begin treating her.  Though all the signs are there, would anyone believe your diagnosis beyond a simple  layman’s estimation?  Probably not.

appraisehomesLet’s take the same scenario however, with a slight change.  What if you prefaced your comments about the game by saying, “In my 20 years as a professional referee, I have never seen a call like that.”  Or on your way out of the stadium you announce, “Please make way, I am a cardiac physician.”  Would this change the expectations of those around you?  Most likely.  Representing yourself as an expert changes the anticipation of those in observation or receipt of your services.  The same is true as an appraiser.

USPAP Advisory Opinion 21 makes it very clear that an appraiser who is acting as an appraiser in a valuation assignment is expected to adhere to the Standards of USPAP and expectations of individual state laws.  In other words, you cannot obtain the valuation assignment because you are an appraiser and then say, “Well, I did not follow USPAP because I was not acting as an appraiser in that particular situation.”  If you are actively promoting yourself as an appraiser and are asked to value property (no matter what the assignment), you are expected to follow the rules.

On the other hand, there are many assignments which would not require the same level of adherence.  For example, many appraisers are also brokers, consultants, or experts in other, related fields.  If you are asked to perform a Broker’s Price Opinion as a real estate broker, you would not be required to adhere to USPAP in that situation.  Just be clear to distinguish the ‘hat’ you are wearing in the report.  So, when is an appraiser not an appraiser?  When he or she is not promoted as such or acting in the capacity of an appraiser.

Now, go create some value!



11 thoughts on “When is an Appraiser Not an Appraiser?”

  1. I totally agree with your article. I am a USPAP instructor, certified general appraiser, and also own a small real estate business. Talk about having to be careful what hat your wearing. I just finished teaching an update class and many of my students were asking about this specific topic. I explained it exactly how you did hear and we read AO 21 as part of the class. I don’t think all of them will follow the rules on this because the market is getting tighter for some appraisers who only do lender work, but I believe you must follow USPAP if you are acting as an appraiser. I have chosen to not do any BPO’s, but that is a business decision based on the value of my time. Good article.

  2. Thomas G. Rife, MAI, SRA

    Robert–I disagree, but that is what makes the world go around. Most of the uneducated public will hire use because of our qualifications and want the knowledge that we have gained as appraisers. If you represent yourself as an appraiser, then following USPAP is the path that we have chosen. Utilizing any of the AVM products as an appraiser must be considered as if you are working as an appraiser and representing yourself as an appraiser. It is not as simple as taking off one hat and putting on another. The old saying, “If it looks like a duck, quacks like a duck, talks like a duck, and waddles like a duck, then it must be a duck,” must be applied. The AVM is a short cut product for the Realtor and the untrained parties to utilize for evaluation, not to represent a market value appraisal. It is a slippery slope. Clear your product with your State Board before utilizing any non-USPAP quickie. If you are a licensed, professionally designated Appraiser, then (in my opinion) following USPAP is a must. Am I old school, yes. But, appraisers need to take a stand when it comes to what tools are acceptable and what tools are mis-leading. Thanks for listening!

  3. Thomas is right. Once a doctor, then no longer a nurse. The appraisal board most likely needs to address this is it hasn’t already done so. I am a broker and appraiser but I don’t work as a realtor. If I did then I’d probably consult an attorney for some legal words that makes it clear that I’m not acting as an appraiser.

  4. Implied, but not directly stated in your article, is an appraiser CAN do an ‘evaluation’ assignment for a lender. Evaluations typically are done for asset monitoring and apply to properties with values less than the federal de minimus of $250,000. Evaluation assignments typically do not use a GSE form as a basis of the report.

    When an appraiser is hired to perform an Evaluation, using a ‘form’ or reporting method that states the value outcome is an Evaluation, the appraiser still must adhere to USPAP’s Standard 1 and Standard 2, plus the Ethics Rule, Record Keeping Rule, Competency Rule and Scope of Work Rule.

    People who are allowed by the lender to perform Evaluations, but are not licensed appraisers, don’t have the same ‘legal’ requirement to comply with USPAP. However, the lender should have in place a set of guidelines applying to Evaluation reporting.

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