What Type of Assistance Must be Disclosed on an Appraisal Report? …and how to do it.

For most appraisal business owners, this article does not apply. Why? Because they do almost everything themselves (with the possible exception of answering the phones and email). For those who have discovered the Law of Delegation (the single biggest factor leading to my own success) however, this information could save your license.

USPAP clearly states, “When any portion of the work involves significant real property appraisal assistance, the appraiser must describe the extent of that assistance.” (Rule 2-2 (a) (vii)). In other words, if another person (other than the appraiser signing the certification page) gives a ‘significant’ amount of assistance, explain who they are and what they did. Pretty simple, eh? Not really….here’s why:

First of All, What is the Definition of ‘Significant?’

Is being the one who accepted the assignment over email considered significant assistance? What about gathering preliminary data from the local MLS and/or county records? Performing the inspection? Accompanying the appraiser on an inspection? Completing the inspection alone? What about comp selection, input, adjustments, or reconciliation? These are all questions worth answering.

First the Bad

These questions can probably not be answered with absolutism. The trouble is the same problem with most rules, laws, and guidelines; they are open for interpretation. The squishy one here is that pesky ‘significant’ word. Significant is…well…an opinion. However, there is some limited guidance from the Appraisal Standards Board. Those are the guys who invented USPAP, so their opinion should probably rank as being somewhat important. From a July 2009 Q&A, they state, “USPAP does not define what significant assistance is in any particular appraisal, appraisal review or real property appraisal consulting assignment. You can, however, obtain more guidance on how to make a decision on whether your contributions to an assignment should be considered significant within USPAP by reviewing Advisory Opinion 31 – Assignments Involving More than One Appraiser.” (Vol. 11 No. 7). Okay, so that was not actually helpful, but at least it facilitates our understanding that the ASB is as clueless on the definition of ‘significant’ as we are.

Oh wait, there is more, “Clerical responsibilities such as file preparation, typing reports, and similar activities are NOT considered significant assistance” (ibid, emphasis is mine). At least we now know what ‘significant’ is not.

I guess the bottom line is that ‘significant’ is up to the judge, state board, or jury who may convict you. My advice? Err on the side of caution.
How to Disclose

Next question: How must one disclose the assistance given on an appraisal assignment? Says USPAP, “When a signing appraiser(s) has relied on work done by appraisers and others who do not sign the certification, the signing appraiser is responsible for the decision to rely on their work. The signing appraiser(s) is required to have a reasonable basis for believing that those individuals performing the work are competent. The signing appraiser(s) also must have no reason to doubt that the work of those individuals is credible.

“The names of individuals providing significant real property appraisal assistance who do not sign a certification must be stated in the certification. It is not required that the description of their assistance be contained in the certification, but disclosure of their assistance is required in accordance with Standards Rule 2-2(a), (b), or (c)(vii) as applicable” (Standards Rule 2-3). In layman’s terms; if you are the signing appraiser, you accept ALL responsibility for that report…regardless of who did what. Does that mean someone else could actually do 100% of the appraisal, the appraiser sign it and disclose the fact that he did not even look at it and it be legal? According to the black and white USPAP I think so, but good luck getting the client to accept that report. But it is also clear from the statement that if anyone does provide assistance their name must be in the certification.

So, who then must sign the certification? According to the above paragraph, everyone who provides ‘significant’ (see above) assistance must be disclosed on the report and their contributions fully revealed. However, it is also clear that not everyone who provides significant appraisal assistance must actually sign the certification page.

For further clarification, we must simply turn to the Certification page itself. There are two (and only two) areas that one can sign on the Cert. page. The first is titled “Appraiser.” The second is labeled “Supervisory Appraiser.” What if you are neither? If you cannot claim to be either the Appraiser or the Supervisory Appraiser, it only makes sense that you cannot sign the Certification page. This is backed up by Dave Maloney, AOA CM in his article, When Assistance is Provided by Others. He indicates that the information for his article comes from a query with answers coming from Bill Novotny, a AQB-certified USPAP instructor. The article states, “The primary appraiser does not identify non-appraisers providing assistance in the USPAP certification statement. This is because the certification requirements of USAP apply only to ‘appraisers.’ Thus only appraisers sign the certification statement and only appraisers are identified in it as having provided significant appraisal assistance.

“Accordingly, when non-appraisers provide assistance the primary appraiser’s only obligation is to disclose in the appraisal report the extent of the assistance if such a disclosure would aide in the understandability of the assignment report or, as mentioned above, if the primary appraiser feels it prudent to do so in order to document due diligence.” (http://www.appraisalcourseassociates.com/archive/newsletter/update11/assistanceofothers.htm)

Where to Disclose

Per USPAP, “…state the name(s) of those providing the significant real property appraisal assistance in the certification in accordance with Standards Rule 2-3” (Standards Rule 2-2 (s)(vii) emphasis added). Standards Rule 2-3 IS the Certification Page and number 9 states, “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.)” The problem is; most software will not allow you to edit or add to the Certification Page. It is as permanent as a government job. As I see it, there are three possible solutions to this problem; 1. Get a different software program, 2. Write your own Certification Page, or 3. Make an addendum to the certification page and title it something like “Certification Page Amendment.” What is clear is that simply putting the names and description on page three, a general text addendum, or in the scope of work is not acceptable. It must, somehow, be included in the Certification itself.

To Sum Up

Anyone (appraiser or non-appraiser) can assist you in completing an appraisal assignment. Think about that.  You may (and I highly suggest you do) use the services of any person you deem qualified to assist.  If their contribution is considered to be ‘significant,’ you must state their name and the details of what they did. If they are an appraiser, it is acceptable to have them sign the Certification Page (also making them liable for the content), but no details of their assistance needs to be given. It is also permissible to simply state the name of the contributor in the Certification without actually having them sign their John Hancock, but in this case a description of their contributions must be included in the report somewhere.

We clear? Good.

Now, go create some value!

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Dustin Harris is a multi-business owner, but he made his fortune as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and mentor. He owns and operates The Appraiser Coach (www.theappraisercoach.com) where he personally consults and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth.  He and his wife reside in Idaho with their four children. This article may be reproduced and distributed only in its entirety without permission from the author.

 

6 Comments on “What Type of Assistance Must be Disclosed on an Appraisal Report? …and how to do it.”

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  4. Hi, I am a NY and GA Certified Appraiser out of work right now, is there any way I can type up reports for you? 770-912-1110
    Sincerely, Joanne

  5. Is an appraiser trainee considered and “Appraiser”? I am a trainee and we have been disclosing that I have “provided assistance with data collection and inspection”. That seems fine up to the point where I start doing the whole report myself, including the value reconciliation process. Once I start doing that and my supervisor is checking my work, should we alter the language to say I am the one doing the work? Please point me in the right direction to figure this out!

    Thank you! Love the show! My supervisor and I both listen and learn!

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