Author: George Dell

Should We Raise the Appraisal Deminimus Threshold to $2 Million? 7

Should We Raise the Deminimus to $2 Million?

Bank regulators are nearing a decision to raise residential real estate transactions appraisal threshold to $400,000 from $250,000, for certain transactions. Perhaps it should be set to $2 Million, or $5 Million. It strikes me that we have two separate taxpayer regulatory/administrative/quasi-governmental organizations working in opposition. On one hand we have the Appraisal Subcommittee and The Appraisal Foundation (TAF), and 50+ state organizations attempting to regulate, license, and control the education of appraisers. USPAP, (Uniform Standards of Professional Practice) is promulgated by the Appraisal Standards Board (ASB) of the TAF.  USPAP compliance is required for federally related transactions. USPAP comprises two parts:...

Skeptics, traditional, vocational or advanced appraiser. What kind are you? 30

What Kind of Appraiser Are You?

Skeptical skeptics are a rare breed. But growing in number… Different appraisers have different attitudes! Some have a lot of experience, others a lot of education. Others emphasize the ‘art’, while others consider themselves ‘quants’. Let’s put aside the ‘art’ versus ‘science’ discussion, where the artists say: “No computer will ever replace the appraiser”, or “No amount of education will ever replace experience”. The other side seems a bit confused. There are traditionalists. And there are the “advanced” appraisers. And there are the “vocational” appraisers, who don’t seem to care much about all of this. They just want to push through as many reports as possible. The skeptics tend to doubt...

What Does it Mean Support and Prove? Uncertainty Is Risk 2

What Does it Mean ‘Support & Prove’?

What we do is subject to uncertainty. I searched the words: support and prove in both USPAP and in The Appraisal of Real Estate”. Interestingly, the word prove is not found in either document in this context. The fuzzier word support is found throughout both. The word ‘support’ seems to support supporting your opinion. How is the word “support” used in the context of making adjustments? I decided the dictionary would provide some support for how the word ‘support’ is used. The results are curious, perhaps troubling. Which comes first: the opinion, or the analysis? Do you support your opinion, or do you come to a result from doing your analysis? As a verb, the meanings of ‘support’ include: suggest the truth...

What is Truth or Accuracy for Appraisers? How Do We Find Accuracy? 12

What is Truth or Accuracy for Appraisers?

Are we supposed to be paid truth-seekers? The appraiser is supposed to be accurate. What is “accurate”? Dictionary meanings say accuracy is “the condition or quality of being true, correct, or exact.” Tell the truth. Can it be? Hmmm. A search for truth. OK. So how do we come to know the truth? Are we supposed to be paid truth-seekers? Cool. I read that there are four ways to “know” truth: Tradition, Authority, Insistence, and Science. Wow! Let’s look at these briefly. This sounds serious! Let’s look at USPAP and The Appraisal of Real Estate. Appraisers have long been steeped in the...

Is It Possible to Prove an Adjustment 3

Is It Possible to “Prove” an Adjustment?

We read articles and advertisements on how to prove an adjustment. Is this possible? How wonderful it would be. To prove an adjustment, just push a button and bam! Out comes the correct answer. How could we have we missed this? …prove an adjustment, just push a button…Of course, if such a simplistic and exact answer was possible – anyone could push that button.  An AVM run, a BPO agent, an “evaluator”, or anyone else. Who needs all that USPAP competence and integrity stuff? Even a lender-appointed hybridized “field inspector” could just push the button. The whole process could even skip working with the licensed appraiser completely!...

What Are Recognized Techniques & Methods? Adjustments: Now What? 13

Adjustments: Now What?

So, what are these methods and techniques? We’re told to “support” our adjustments. We hear words like “prove” your adjustments… as if there were some magic formula which can give an exact, correct, and absolutely true number. It used to be so easy… Our trainer gave us a sheet with the “right” adjustments. Simple. USPAP Standards Rule 1-1 says we must be aware of, understand, and correctly employ recognized methods and techniques. What are they? Who recognizes them? How do I apply them? So, what are these methods and techniques? Let’s look. In The Appraisal of Real Estate (ARE) p.46, it says: “Qualitative analysis techniques may also be...

Is the Non-appraiser Inspector Worthy of Belief? Can You Believe That? 27

Can You Believe That? Hybrid Appraisal Part 4

…non-appraiser inspector must not provide any significant appraisal assistance… This is Part Four in a series on Hybrid Appraisal. Be sure to read Part One, Part Two and Part Three. The term “hybrid appraisal” (as it’s currently used), means that the appraiser sits at a desk, while someone else (not an appraiser) looks at the property. It appears that the non-appraiser may or may not inspect the interior, measure the improvements – but always takes a front photo, similar to what can be found in MLS listings, or Google Earth street pictures. The basic claim is that the overall process is cheaper and faster, and...

Do You Have Two Appraiser Brains? Which Brain Wins? 12

Do You Have Two Appraiser Brains?

So, do you have two brains? One appraiser brain says you must be “independent, impartial, and objective.” (USPAP) It wants to be good. It wants integrity and to sleep peacefully at night. But there’s another brain. It’s primal and wants to survive. It has other responsibilities: meet the bills, feed the family, pay the mortgage, and pay government taxes/fees. And recorded in this brain is that part of the standards which say: Do what your clients expect; do what everyone else does. As paraphrased, the sole guides to an acceptable scope of work. The two brains may not talk to each other. Each...

Who Benefits from Hybrid Appraisals & Who Pays the Price? 24

Who Benefits & Who Pays the Price?

Why does a hybrid appraisal work better? What are the benefits? Who benefits? Who pays? A hybrid appraisal, as it has been proposed, separates the field work from the desk work. The assumption is that an appraiser is good at filling out the forms, while another “cheaper faster” person can do the property inspection. Also, we presume that the client would be the one to select the field inspector. For this post, we also assume that the property inspector is a real estate agent. This is the third post considering “hybrid appraisal”. I had intended it to be no more...

The Public Trust - A Failed Goal? - Rearranging the Deckchairs on the Titanic 8

The Public Trust – A Failed Goal?

Presumably, "public trust" is the foundational test. Have our institutions, rules, regulations, standards, and social expectations failed us? The purpose of the Uniform Standards of Professional Appraisal Practice (USPAP) is to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers. Preamble 2018-2019 Our mission is to foster the public trust of our members and the appraisal profession through compliance with the highest levels of ethical and professional standards. The American Society of Appraisers Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. The Appraisal Institute Some ten years ago, financial...

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