Why are Appraisers Banned from Doing Work They’re Qualified to Do?

I just got out of an interesting conversation I had with my CPA. Eventually, our conversation veered onto the topic of work. I was curious about what it takes to get into his field (not that I’m interested in getting into it at all).

We talked about our respective professions and about changes occurring in the real estate appraisal field. We got into talking about what it means to be a CPA, which is different than being an accountant. A CPA is an accountant, but an accountant isn’t always a CPA.

He said anyone can hang up a shingle and say they do tax returns. It’s different, detail-wise, when a CPA does it. I asked if, as a CPA, he was disallowed from doing anything. The example I asked specifically about was that he does my tax planning and someone else in his company does my bookkeeping. He said that was just the way he had set things up, but he could do both if he wanted.

Because much of what he does has to do with the law, he said he must make it clear that he is not an attorney and cannot do work as one. A CPA can be an attorney and vice versa, but that is typically not the case. This didn’t really answer my question, though.

As a pay scale situation, even though he could do bookkeeping, it made more sense for him to hire a bookkeeper than be one. This made sense to me, since he could take tasks that would pay higher, such as tax preparation, and leave those lower-paying tasks to subsidiaries. He can do audits and compilations, as well as other tasks, but he is held to a different standard for all of these. All he must do is disclose his scope of work, for example just stating, “This is an audit.”

I got to thinking that, as a real estate appraiser, I am disallowed from doing certain things that I am highly qualified to do. Some United

 States jurisdictions have passed laws that allow an appraiser to do “Evaluations.” Everywhere else, we are barred from doing so even though we are highly qualified to perform the task (whether you want to is another topic altogether).

My CPA can choose to only do audits. As real estate appraisers, shouldn’t we have a similar choice? Is it fair that my CPA can choose which services he will perform, but an appraiser can’t? I don’t know of any other profession that disallows you from doing something just because you have a higher-end license. As appraisers, shouldn’t we be able to choose whether we want to do an Evaluation, review, or full appraisal if we want to?

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7 Comments on “Why are Appraisers Banned from Doing Work They’re Qualified to Do?”

  1. I have had this thought many times… And no one really seems to ever be able to answer my question.

  2. Appraisers can do evaluations – they are called Restricted Reports. The major jurisdictional difference is whether those reports need to be USPAP compliant.

    If you are speaking to residential appraisers, the real issue/challenge is, between AVM’s , utilization of “collateral underwriter”, and major “evaluation’ firms it is rarely cost effective. I have developed residential evaluation policy for multiple financial institutions with the “typical” certified residential appraiser only being tasked when there are complex issues… then the advise is to get a full appraisal…

    1. With Respect, in most states, appraisers can do restricted reports (as you point out), but not evaluations. One is USPAP compliant, the other does not have to be. Clients do not want a USPAP compliant report because they now have oversite they were trying to avoid by ordering the Eval in the first place. Some states have carved out an exception.

  3. Appraisers are allowed to get a Realtors license and complete different types of evaluations. Its an option….

  4. I generally agree with Dustin on this. An ‘Evaluation’ is an appraisal for all intents and purposes, not named an ‘Appraisal’, but it’s done by someone who is not licensed as an appraiser, and is not considered to be in compliance with USPAP. That’s the way the ‘agencies’ who control banking set it up. It’s set up that way because the banking institutions wanted to have a way to get property valuations done (using Evals) without actually hiring an appraiser, potentially for a higher fee or salary.

    Secondly, most state laws stipulate that anytime an ‘appraisal’ is done, it must be in compliance with USPAP, and be done by a state licensed appraiser. States did this to comply with the FIRREA law from 1989. Because an Evaluation is NOT an appraisal (in name only), but is a VALUATION SERVICE based on the same info an appraisal would have, a non-licensed person can do them.

    Again, it’s the way the “game” is structured. The only way around this is to have a governor sign a bill allowing for appraisers to do Evaluations. A few states have done this, but most have not….in many cases because the banking lobby is opposed.

    Some states, like California, allow anyone to do an appraisal or even an Evaluation, when the underlying loan is NOT for a FRT transaction …. which means a loan not administered by any lender who is regulated by one of the ‘Agencies’ mentioned above. I personally know of a certain appraiser who surrendered the state license due to administrative discipline, but is busier than ever doing all kinds of assignments that are outside the purview of the state regulators. The appraiser is much happier also!!

  5. Pingback: The Complete Guide to Virtual House Hunting During COVID-19 – Cleveland Appraisal Blog

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