Appraisal Standards Should Age Like Fine Wine
Changes in Appraisal Standards?
We have barely got into the “New” 2016-2017 copy of USPAP and the ASB is meeting on February 19, 2016 to discuss making changes to the 2018-2019 edition of USPAP. Here is part of what I have written to the ASB. I believe it should be the duty of every appraiser to write to the Foundation and any board that is contemplating making changes. You have that right, and they will read your comments.
Letter to ASB:
I have been a real estate appraiser since the mid 1980’s and prior to mandatory licensure. I have been in the Real Estate Profession since 1972, 2 years prior to retirement from the U.S. Navy. I hold a brokers license as well as being a Certified Residential Real Estate Appraiser. I have been an educator/instructor of real estate and appraisal courses since the early 1980’s and have an Associates Degree in real Estate. I am qualified by my state to teach all pre licensure courses for real estate agents, real estate brokers, and real estate appraisers with license #64 for real estate pre licensure and license #2 for appraisers.
I state the above simply to say I have been around awhile, and have seen many changes in both professions, some good, some not so good. And that is the purpose of my letter to you today.
When the licensure of appraisers was to become mandatory, I was in total agreement. I put together a series of courses for a local real estate school to begin the education process for applicants. This was 1990, well before the mandatory date. I was also at that time, a member of the Real Estate Educators Association.
The first copy of USPAP I ever saw, and used, came by Fax to the real estate school. I took considerable time to understand it, prior to teaching others. By serving on a committee of the REEA I was also privy to what the “New” Appraisal Foundation wanted appraisers to have as minimum qualifications to be state licensed or certified. It was basically a 4 year degree, and 5 years of experience as I recall. The committee I was on, advised that this was not likely, and, the fact that some states objected, and several even received wavers when licensing went into effect, with bare minimum qualifications. It seems that a 4 year degree has always been the goal of The Appraisal Foundation, and now, even that is being questioned. But, more about that later.
In the 1990’s I attended a meeting of The Foundation in Washington, D.C., mid year where the great and glorious “Departure Provision” was born. It took several years for the professions, and the Foundation to finally realize that such had been a terrible mistake. I also attended a meeting in Reston, Virginia, where the Foundation wanted to totally revamp the standards, reorganize them, and develop as I recall, 12 standards. Fortunately that was shot down rather quickly by all concerned.
Then we had the famous 3 types of appraisal reports, that never lived up to their purpose. For example, no one ever created a truly “Self Contained Appraisal Report”. That too was eliminated in time, and we now have what we should have had all along, a report of an appraisal with a scope of work dictating what that means in each report.
With the 2016-2017 edition of USPAP we have eliminated the “Statements” and have made them into new Advisory Opinions. Likely where they should have been all along.
Now, it appears that once again, The Foundation is considering changing the standards, and adding new standards. Why? To me a standard of practice should be one on which we can depend, year after year. It seems that each new edition of USPAP will just have to have some tweaking, change, or addition or the Foundation and it’s boards are not doing their job.
Each and every time the standards, any standard, is changed, modified, or deleted, it causes confusion. It also causes appraisers to be sanctioned. Some have or will have their license revoked, and a few of those, through no fault of their own, but mistakes made by the state(s) in interpreting and enforcing new standards or regulations. And, I understand that this is not new.
Specifically, the state of Virginia (I do not know about other states) is about to take the license/certifications of 12 appraisers. This came about due to the state not reading correctly, the educational requirements beginning in 2015, a 4 year degree. And, no one it seems is willing to help these appraisers whose income, profession, and good names are about to be damaged. No one it seems is willing to help, in any manner.
That is just one example as to how USPAP, and qualifications, as a moving uncertain target can harm appraisers, and certainly can cause damage to what I thought was our goal, the Public Trust. I imagine that there may be 1,200 or more appraisal out there completed by these appraisers. Some for FHA, many for AMC’s. Does the taking of a license and declaring it invalid also have an impact on the loans that are the results of these appraisers’ work? Might very well be the case, and maybe lawsuits to follow.
I believe that standards should be reliable, not ever shifting. They should be like fine wine that only gets better with age.
And, given the fact that no one, that I am aware of, has ever proven that the Public Trust has been harmed by appraisers, long licensed or certified by now, and lacking a 4 year degree, have ever been harmed any more than they have been harmed by those with a 4 year degree or higher. It might be worthwhile to do a study of that.
I am not saying that standards should never change, but, simply saying there needs to be a good reason for any change. I recall attending a meeting a few years ago when we still met in person to qualify to renew our AQB Certification to teach USPAP, that one board member (not sure which board) stated that it had taken them 6 months to decide on one change whether to insert or leave out, a single word in a change. There was laughter in the room, but honestly, it really was not very funny.
I have not seen any proposal for developing the 2 new standards (4 & 6) that is referred to in the announcement of the next meeting, but I would hope that there are very good reasons if such changes are necessary.
I likely will not attend such a meeting as I do not have the resources to attend, and not sure if I could add anything else as well.