Appraisers Should Never Do Evaluations
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TALCB will be considering the Board’s position regarding appraisers performing evaluations in compliance with USPAP at the next Board meeting on August 23, 2019
Dear Texas Appraisers Licensing & Certification Board Members:
The short and sweet version is that appraisers should never, repeat never do ‘evaluations’.
The term itself should never be uttered as if it refers to any legitimate appraisal product that meets the USPAP requirements of a real estate appraisal.
When FIRREA 1989 was first written, The United States Congress recognized that there may be rare instances in rural or under served areas in which a lesser product that does not meet all (or even any) of the requirements of USPAP may be required for a variety of exceptional reasons.
They called these poorly defined “less than appraisal” products, evaluations. They never intended that they should become the preferred lowest cost / fastest turn time ‘valuation product’ available.
As originally written, evaluations were specifically prohibited from being referred to as appraisals, or allowed to ever be called appraisals.
If USPAP and FIRREA 1989 are to have any remaining credibility across the nation, then evaluations should be kept separate from the uses which require appraisals, and the professionals that perform those appraisals.
Bifurcated Hybrid products have already attempted to blur the distinction between the two; repeatedly using both terms in the same reports as if they are interchangeable.
The Uniform Standards of Professional Appraisal Practice already permit service limitations by direct statements in the scope of work, while still allowing the flexibility associated with limited scope restricted appraisal reports. Frankly even that was an error. The (repealed) Departure Provision enabled deviations, while preserving the rest of USPAP applicability.
If a change is required, then let it start with The Appraisal Foundation (TAF). Let THEM revise the wording that limits restricted use reports so that they may function like ‘evaluations’ without negating the rest of USPAP requirements. Otherwise, there will never be uniformity, and cross over erosion of real appraisal standards will inevitably follow.
Evaluations were never in the province of appraisals. Nor were the requirements for who could do them ever indicative of special skill or experience. Frankly, users of evaluations knew and accepted up front that if they obtained evaluations in lieu of real appraisals that they were getting meaningless value opinions by unqualified personnel.
That low level quality of work should never be allowed to cross over and be treated as if it was ‘almost as good’ as a real appraisal. Allowing appraisers to complete them legitimizes them in the public eyes.
Allowing evaluations to be produced by appraisers will only further muddy the quagmire that USPAP compliance monitoring has become for regulators nationally. Many states already act as if SR3 and SR4 obligations don’t apply to them, based on bad advice from AARO and TAF.
That means we already have 50 states and 5 to 7 more territorial interpretations of what USPAP compliance is. What will happen when they allow a product which by its very definition is and never was intended to be USPAP compliant?
Will the same state regulators (not Texas) have 50 separate interpretations of the horribly ambiguous IAE Guidelines to reinterpret? Will TAF and AARO simply urge regulators to follow more compliances matrices without the ‘investigators’ necessarily understanding what it is they are investigating?
Texas is fortunate to already have a two step process of legal review and screening as well as USPAP compliant real estate appraisal review as part of the process of assuring USPAP compliance. Will current appraisal professionals at TALCB also be required to ‘review’ these products which really have no defined standards of performance?
Or, will Texas be forced to hire failed loan officers, bank managers and banking parking lot attendants to screen evaluation reviews for quality control, since they don’t have anyone with standards that low? I mean, those are the people that can perform them now.
Currently 70% of all complaints received by TALCB are dismissed as having no merit. Those are based on real appraisals. Imagine the inundation when (if) evaluations prepared by appraisers result! Are consumers really going to understand that sometimes the appraiser performs to specific minimal federal standards, and other times they simply don’t? What about the appraisers themselves?
There is never a shortage of loan officers or lenders; or AMC companies willing to urge appraiser to ‘cross the line’. A standard joke in the professionis “Why you are the only appraiser that has ever told us that can’t be done. All our other appraisers do that.” Whatever the ‘that’ happens to be.
The American Guild of Appraisers membership all strive to provide the highest quality appraisals that they are capable of. We have not had a great hue and cry to lower the standards so that they too can routinely produce sub standard valuation analyses.
TALCB should consider who exactly is claiming appraisers need to be able to compete for sub par work.
Respectfully submitted, on behalf of the American Guild of Appraisers
Mike Ford, AGA, GAA, RAA, CGREA, Realtor®
California General Certified R.E. Appraiser
Chairman National Appraiser Peer Review Committee
V.P. Special Projects
American Guild of Appraisers, #44, OPEIU, AFL-CIO
(714) 366 9404