Third Party Blues



Illinois Appraisal Newsletters at IDFPR
Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.

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Significant Appraisal Assistance, Outsourcing & Third-Party Blues

What is the significant part of significant contribution?

Most lenders would rather not do the work of cultivating and curating a panel of appraisers. This is largely why AMCs exist.

AMCs, in turn, quietly off-load some of their activities to other subcontracted entities. Some AMCs contract out state licensing and registration compliance responsibilities to outside concerns. A few use portals to send out engagements to their panel of appraisers. Others farm out payroll and invoicing. Still others outsource their QC work.

This begs the question: What exactly do some AMC’s provide…directly?

Some appraisers, too, don’t seem to be interested in running all aspects of their businesses. Some engage others to take comp photos or rely on photos already stored and ready for purchase (i.e. CoStar). There are companies out there that will provide inspections. They send someone out to observe the subject property, obtain images and offer opinions on the home’s condition. Like everything thing else in this world…there’s an app for that.

What is the significant part of significant contribution?


USPAP does not include a definition of significant appraisal assistance. However, aspects of this phrase can be explored to clarify its meaning.

First, the adjective significant means that the contribution must be of substance to the development of the assignment results. In other words, the individual must contribute to the valuation analysis in a noteworthy way. An individual who merely collects or provides data for use in the analysis does not provide significant appraisal assistance.

Secondly, the reference to the term appraisal assistance means that the contribution is related to the appraisal process or requires appraiser competency. One misconception is that non- appraisers who provide assistance should be identified in the certification. This is incorrect because the certification requirements in USPAP apply only to appraisers. Thus, only appraisers sign the certification or are identified as providing significant appraisal assistance.

For example, the use of an environmental expert to determine wetland boundaries would not be considered significant real property appraisal assistance.

Examples of contributions made by appraisers that constitute significant real property appraisal assistance include the identification of comparable properties and data, inspection of the subject property and comparables, estimating accrued depreciation, or forecasting income and expenses.

The problem for appraisers is this:

If you rely upon someone else to inspect the subject property — whether a complete interior inspection or a simple curbside visit; this is considered to be significant contribution.

Does it matter whether or not that the “inspector” holds a license as an appraiser? No. The original, signing appraiser is relying on the work of someone else. The simple litmus test is whether the work performed by a third party was so integral to the assignment that the appraiser couldn’t complete the report without their help.

What about someone who just takes pictures? This has been going on in appraising for as long as I can remember. An appraiser sends out a photographer to capture images of the subject and/or the comparables. Is this a violation of USPAP? It can be. It depends upon the level of disclosure.

First, many, if not most assignments require the signing appraiser to make a personal inspection of the subject and comparables.

From the URAR Scope:

The appraiser must, at a minimum: (1) perform a complete visual inspection of the interior and exterior areas of the subject property, (2) inspect the neighborhood, (3) inspect each of the comparable sales from at least the street, (4) research, verify, and analyze data from reliable public and/or private sources, and (5) report his or her analysis, opinions, and conclusions in this appraisal report.

It doesn’t say to use a surrogate, Google Earth, or MLS images. If you have to see it yourself; why send someone else?

As for AMCs who not only permit third party inspections but promote them, they have a problem.

Under Qualifications for Registration:

(6) a certification that the applicant will utilize Illinois licensed appraisers to provide appraisal services within the State of Illinois;

It doesn’t say surrogates, does it?

By Brian Weaver, Coordinator Editor of IllinoisAppraiser, Appraisal Management Company Coordinator for the Illinois Department of Financial and Professional Regulation (IDFPR)
Source Illinois Appraiser Newsletters – Volume 10, Issue 2 – May 2017



Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois. promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.

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21 Responses

  1. John J Appraiser says:

    I believe Mr. Weaver just squashed any notion of using a 3rd party inspector for the subject observation. Thank you Mr. Weaver for pointing out in writing what appraisers already knew. I wrote an article a few weeks ago that touched on this very same topic in response to an article written by Alan Hummel with First American. Enough Already, Nobody is Listening


    • Baggins Baggins says:

      Been saying this for many years now;  I’ll fall over backwards in my chair if a lender ever gets the 10k/20k daily fine for violation of appraiser independence.  And I’ve added another one;  I’ll fall over and spill coffee, if Mercury network and the other software platform providers force a clear disclosure for which appraisal groups do use outsourced services and who does not.  Outsourced services nullified everything to do with ratings matrix, turn time comparisons, and a long list of other previously available performance measurement tools.  My most effective marketing tool is simply to brag that I do it all myself and refuse outsourced service assistance.  Now, how to convince companies like Mercury to allow me to have a little checkbox which clearly identifies to clients I’m not a cheater, I’m not a corner cutter, and I don’t use unlicensed inspection assistants.  You’d think a company like Mercury would be all over that but quite the opposite in fact, they’re scared pantsless to even consider putting forward such a straightforward disclosure point for appraisers.


  2. Xpert says:

    “What exactly do some AMC’s provide…directly?”

    Great question! Let me think…hmm…. nothing comes to mind…. nope nothing!


  3. Baggins Baggins says:

    Related to third party, but not related to amc’s. This is what I’m on about lately; the continued increase in investment purchasers. Certainly when this much stock goes out of circulation it will have lasting negative effects. If you sell, please do not sell to investors. Today from drudge:


  4. realrose says:

    the relationship between AMC and appraiser is exploitative; our licenses, training, expenses such as E & O and data have all gone up while they have no obligation to disclose to the appraiser what they are making off our businesses!


  5. Great article Brian,

    Doesn’t it strike you as counter productive for USPAP to require a half page definition for the term ‘significant assistance”?

    The only reason we arrive at conditions like this is that both most regulators (other than yourself Sir!) as well as the authors of the bi annual special interest papers called USPAP, suffer from headuptheirassitus.

    1. Head, meaning that portion of the anatomy attributed to be the center of thought;

    2. Up, a direction. Typically in a vertical orientation.

    3. Their, a possessory description concerning ownership

    4. Ass, an area not originally intended for the storage or optimal performance of the cranial content or container

    5. Itus, A pseudo medical-latin sounding suffix  to help focus attention on the real problem.


  6. realrose says:

    We appraisers are always trying to be brief and concise.  Next time Mr. Ford, you can say the same thing as above by just calling it what it is:  Anal Cranial Inversion!

    Have a nice day!



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Third Party Blues

by IDFPR Board time to read: 3 min