Going the Distance in USPAP
When I was in private practice, much of my litigation work took me to Somonauck, Sandwich and Plano, Illinois. That’s about 45 miles west of where I live. Still, I had so much work in those areas, you’d think I had an office there. However, if I were working for many AMCs, I’d have been considered too far out of my area for the assignment.
Some AMCs, under the guise of authenticating geo-competency, restrict assignments to Illinois certified appraisers based upon arbitrary distance limitations. Most typically seen are 15 miles for urban/suburban locations and 25 miles for rural. Then there are others who insist on 45 mile limits or 30 mile limits for any and everything.
What does USPAP say about geo- competency?
With regard to Competency in general:
The appraiser must determine, prior to accepting an assignment, that he or she can perform the assignment competently.
Comment: Competency may apply to factors such as, but not limited to, an appraiser’s familiarity with a specific type of property or asset, a market, a geographic area, an intended use, specific laws and regulations, or an analytical method. If such a factor is necessary for an appraiser to develop credible assignment results, the appraiser is responsible for having the competency to address that factor or for following the steps outlined below to satisfy this COMPETENCY RULE.
AMCs need to be reminded that under the Illinois AMC Administrative Rules: Section 1452.190 Unprofessional Conduct
“Dishonorable, unethical or unprofessional conduct” as used in Section 65(a)(9) of the Act includes but is not limited to: i) Deliberately interfering with a licensed Illinois appraiser’s ability to comply with USPAP;
Because USPAP states:
In an assignment where geographic competency is necessary, an appraiser who is not familiar with the relevant market characteristics must acquire an understanding necessary to produce credible assignment results for the specific property type and market involved.
AMCs that draw arbitrary circles around appraisers without knowing what the appraisers understand about a market area or segment are misleading their own clients on their vetting process. Aside from that, they run the risk of enforcement action in Illinois. AMCs need to qualify their panels appropriately and thoroughly.
If the distance between the appraiser and the subject is an issue, then perhaps the distance between an AMC and their appraiser should be called into question.
Let’s all use common sense.
By Brian Weaver, Coordinator Editor of IllinoisAppraiser, Appraisal Management Company Coordinator for the Illinois Department of Financial and Professional Regulation (IDFPR) – Illinois Appraiser Newsletters – Volume 8, Issue 2