Appraisal Practices Board: A Free Resource for Appraisers
The genesis of the Appraisal Practices Board was the collapse of the housing market in 2008…
Congressional Hearing Provides Opportunity to Clarify Purpose – FOR IMMEDIATE RELEASE June 29, 2012.
Washington, DC – The Appraisal Foundation (TAF), a non-profit education organization dedicated to professional valuation, testified yesterday before the U.S. House of Representatives, Committee on Financial Services, Subcommittee on Insurance, Housing and Community Opportunity. The hearing, entitled Appraisal Oversight: The Regulatory Impact on Consumers and Businesses, focused on the Appraiser Regulatory System in place today and whether there is need for modifications or improvement of this system.
One issue discussed at the hearing was The Appraisal Foundation’s Appraisal Practices Board (APB), which was created by the Foundation in 2010. Testimony regarding the APB was quite varied. Providing testimony on behalf of the American Society of Appraisers (ASA) and the National Association of Independent Fee Appraisers (NAIFA), Karen Mann stated that,
“We reject the view expressed by some that TAF has engaged in inappropriate ‘mission creep’ by establishing the Appraisal Practices Board (APB) and that the establishment of the APB infringes on the prerogatives of the professional appraisal organizations. The establishment of the APB for the purpose of drilling down on the meaning of certain USPAP provisions and addressing complex appraisal issues in the marketplace was widely requested; and, we believe serves important functions.”
This view was not shared by Appraisal Institute President Sara Stephens, whose testimony regarding the APB stated that, “This is a dangerous and unjustified move that risks hamstringing and jeopardizing the real estate appraisal profession altogether. The regulatory burden for appraisers is on the cusp of being expanded exponentially.”
In his testimony, TAF President David Bunton told the Congressional Subcommittee that there is currently a great deal of misinformation circulating about the APB and that he wanted to take the opportunity to clarify, for the record, the APB’s purpose and mission. Specifically, he pointed out that:
- The APB does not have any Congressional authority and adherence to the guidance is strictly voluntary;
- The APB does not operate with any public/grant funds;
- APB Valuation Advisories do not establish new valuation methods or techniques; rather, they are a compilation of existing valuation methods and techniques; and
- APB Valuation Advisories are available to anyone at no cost.
The genesis of the APB was the collapse of the housing market in 2008. For many appraisers this was the first time that they were confronted with declining prices, short sales and foreclosures. Because a majority of appraisers in the United States do not belong to any professional appraisal organization, the question became “Where do appraisers get guidance for their practice?” The Foundation established the APB to fill an existing void in the area of recognized valuation methods and techniques. This board offers voluntary guidance to appraisers, regulators and users of appraisal services on recognized valuation methods and techniques for all valuation disciplines.
To reflect the needs of the marketplace, the APB annually solicits stakeholders to identify topics where additional guidance appears to be needed. Teams of experts are then selected to work with the APB in developing the appropriate guidance. This guidance is known as a Valuation Advisory and may include more than one recognized method or technique that addresses the specific issue.
Valuation Advisories issued to date include the following (which are available at www.appraisalfoundation.org):
- APB Valuation Advisory #1: Identification of Contributory Assets and Calculation of Economic Rents
- APB Valuation Advisory #2: Adjusting Comparable Sales for Seller Concessions
- APB Valuation Advisory #3 Residential Appraising in a Declining Market
Valuation Advisories currently under development include:
- Identifying Comparable Properties
- Appraising Green Buildings – Background Competence
- The Valuation of Customer-Related Assets (Business Valuation)
- Control Premiums for Financial Reporting (Business Valuation)
- Contingent Consideration (Business Valuation)
Appraisal Practices Board – A Free Resource for Appraisers