Advisory Opinion 16, a Game Changer?

Advisory Opinion 16 Could Be a Game Changer for Appraisers!The Appraisal Foundation has issued an exposure draft for Advisory Opinion (AO) 16. Advisory Opinion 16 is Fair Housing Laws: Avoiding Bias in Real Property Appraisal and Appraisal Review Development and Reporting. Unlike other exposure drafts, the text of the AO opinion has been rewritten. The traditional strike through of word or phrase changes is nonexistent. The Appraisal Foundation acknowledges “the Advisory Opinion was extensively rewritten”.

Comments on the changes are due to The Appraisal Foundation by March 31, 2021 via SurveyMonkey or email,

Although an Advisory Opinion is not a standard of practice, it does express what is expected of appraisers. Every appraiser needs to read this exposure draft. It could be a game changer for appraisers.

If you have ever completed an appraisal report for a lender or an appraisal management company you know very well, a human rarely reads the commentary in the appraisal report. The advisory opinion suggests more specific data, explanation and documentation is expected. This goes in a direction opposite of the GSEs who require vague and often misleading check boxes. Rumor has it the new “modernized” GSE appraisal forms will require even more check boxes so a computer can read and capture the data. We all know the current UAD classifications are vague and unclear; it seems things will only get worse with the GSEs version of modernization. This AO opinion begs the question “Does the Appraisal Foundation think the GSE’s have gone rogue?”

The advisory opinion is about Fair Housing Laws. Most of us think of discrimination against classes of people when we hear that term, however the illustrations within the advisory opinion do not directly connect to that common association. The illustrations stress the importance of explaining the specific differences in detail and how factual information avoids the accusation of bias.

Social media posts have exploded with comments over the proposed advisory opinion. Most have not been positive to the change. It is easy to vent on social media, especially in private groups. But how many that commented on social media have actually commented to the Appraisal Foundation?

The exposure draft is 11 pages including the rationale for the change. Every appraiser should read the exposure draft and seriously think about what is being proposed and the methods being suggested. Then provide your feedback to the appraisal foundation. Social media posts are optional!

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VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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22 Responses

  1. Avatar Van Patton says:

    I am generally not opposed to what they are suggesting. USPAP has always required appraisers to summarize their data and reconcile…nearly every Summary of Sales Comparison I write is 4-5 paragraphs long. This simply covers why I selected the comps, explaining the adjustments, noting anything unusual or specific about the subject, summarizing how I reconciled the value, etc.

    Too many appraisers simply are form fillers without doing the required market analysis, or at a minimum, adequately summarizing their data findings. If we want to be professionals, we have to act like it.

    • Avatar ej says:

      The problem is those appraisers you just mentioned are the ones that get the bulk of the work. The lenders, AMCs, GSEs, State Appraisal boards, and the regulators (who are in bed with all of them) could not be happier.

    • Respectfully Van, “nearly every” would fall into the vague category they are declaring to be verboten. Certainly, we can and should write much more relevant explanations. [Did I just use a forbidden ‘much’ or an ambiguous ‘more’?]

      With form appraisals designed to expedite both the writing and reading of appraisal reports, brevity has been encouraged. Demand for quicker turn-time is also a factor that has to be addressed.

      I agree there are reports that fail to adequately explain. If that is our concern, then we should address than rather than wordsmithing.

      IF TAF merely wants to kiss the patoot of a woke Congress, then let them say so instead of pretending common use of colloquial English is offensive.

  2. Without offering an opinion about the draft of AO-16, let me disagree with the characterization that the GSEs “require vague and often misleading check boxes.”. In fact, Fannie Mae Guidelines state:

    “Fannie Mae’s appraisal report forms and guidelines do not require the appraiser to rate or judge the neighborhood. Fannie Mae requires the appraiser to perform an objective neighborhood analysis by identifying neighborhood boundaries, neighborhood characteristics, and the factors that affect the value and marketability of properties in the neighborhood.”

    The guidelines go on with specific requirements for Neighborhood Boundaries, Neighborhood Characteristics, and Factors that effect the value and marketability of properties in the neighborhood. Providing these descriptions is where the appraiser often defaults to using imprecise, subjective, and generic terms. For example:

    “The subject property is located in an established neighborhood. Proximity to schools, shopping and employment is average. The neighborhood has above average appeal and marketability and there are no unfavorable factors noted.”

    The sentence above tells the client and intended user nothing, and requires the client to, on their own, determine what is “average”, above average”, and “unfavorable”. Use of factual, objective descriptions paints a picture of the neighborhood and market for the client, and sets the stage for the selection of Comparable Sales, completion of the Cost Approach, and Income Approach.

    Just sayin’

    • Avatar Advocate says:

      I believe the author is referring to the UAD Q and C ratings which are vague and fairly subjective. I agree there are many appraisers using canned comments that could apply to any property anywhere in the world. The modernization of the forms from what I have heard is going to be far more check boxes, then open areas for free filling commentary.

    • Avatar ej says:

      Please stop pandering to the GSEs. We need a regulatory overhaul. The GSEs are out of control. The AMC cartel keeps stealing money from both appraisers and borrowers, and you are concerned with some silly comment in the neighborhood section? You busy bodies are the problem.

  3. Avatar Midwest Mouthbreather says:

    I like to call this “Advisory Opinion 16: How to be a ‘woke’ appraiser”.

    The opinion make some valid points at the beginning and rightly points out that most of the issues regarding bias have been illegal in USPAP and other regulations for many decades now. The opinion begins to go off track however about line 124 where we start to get a list of vocabulary words that we should supposedly not use alone anymore.

    As we all know, whether this is an advisory opinion or not, creating a specific list of words or phrases of what to say or not to say in a report, which USPAP generally does not do, will only lead to appraisal management companies and lending review departments creating a “no no” list of words that we can no longer write in an appraisal. Automated systems will pick out these words and force us to write things that we don’t really mean. Anyone that used the so-called review system from Corelogic that they used with Wells Fargo knows what I’m talking about. The authors of this advisory opinion seem to be very confused as to what “precision” actually means. They give an example of stating factual items about the condition of a comparable sale. This is all well and fine, and providing substantive details as to our opinions is always a good thing, but without any concluding statement or analysis saying that because of those facts the comparable is inferior to the subject (because we can no longer use the word “inferior”) it leaves the reader wondering what point the appraiser was actually trying to make. It actually ends up making the paragraph more vague and less precise. In addition, precision involving specific facts is not always possible in every instance. On rural or complex assignments sometimes it is necessary to support a rationale or conclusion with rational opinions where we do not have a specific mathematical facts to list off.

    It’s also interesting that many of the words they say should not be used without explanatory context, such as “typical, slow, etc.” appear on Fannie Mae forms without explanation. In fact “typically” appears in the definition of market value without any explanatory statement as to what it means. Is the ASB actually suggesting that we need to add explanatory comments to the definition of market value so that someone is not unintentionally confused that we are biased?

    It appears most of this was put together by some special interest group advising TAF and not what is considered common or normal/understandable language in the vast majority of the country. The advisory opinion claims that we should avoid those specific words to avoid confusion or unintentional implication of bias for the intended user of the report. But in the case of a report subject to fair housing laws the intended user would ONLY be a lender. Since all lenders are using (and used to for a long time now) various Fannie Mae forms – which contain almost all of these words on them, I wonder how the ASB believes that the intended users are going to be confused? it appears in reality the ASB is confusing the idea that an intended user-LENDER would be confused by this type of narrative versus a borrower or homeowner (NOT the intended user) being confused by it. Lenders have a obligation to the Fair Housing Act right now, yet I have not seen any rush of cases where lenders are instructing appraisers to explain things that are built into the Fannie Mae form that include the “no no” words described in this advisory opinion. On non-UAD forms, like the 1004C, 1025, etc. it is expected by most lenders and Fannie Mae that we continue to use terms such as “average” for both individual material condition such as floor covering or overall condition. If using that word implies bias, why are GSEs, regulated banks, the FHA, etc. not changing the requirements for these forms immediately? Why have they not done so before when these forms have been used during the tenure of administrations of both parties. These entities (GSE, FHA, etc.) would be in a much better position to interpret the Fair Housing Act than the Appraisal Foundation is.

    Lastly, using small special interest groups as the arbiter of language to be used that should be understandable by a wide variety of lending intended users across the country (and not just in the woke Washington DC bubble) will become ever more problematic. An example from one of my own markets- the advisory opinion suggests we should use “one-unit housing” versus “single-family”. At first glance that actually sounds like the most reasonable of the suggestions. One of my markets is a college town, however and beyond the fact that nearly every jurisdiction in America has a zoning code called “single-family residential”, this particular jurisdiction has a restriction on the number of “unrelated people” that can live in a one-unit dwelling. Just using “single-family residential” is actually much more precise and less misleading then a vague term of “one unit housing”. If I conclude that the highest and best use is for “one unit housing”, what does that tell the intended user about the use restrictions for that piece of real estate?

    It is the appraiser’s responsibility to comply with Fair housing laws and that we do not need a list of words dredged up by special interest groups to tell us how to write in a clear and non-biased way. If the ASB is going to start giving us “vocabulary lists” of how we can express OUR OPINIONS it should give us all pause.

    • Avatar Malissa Storey says:

      Have you summitted this comment to survey

      • Baggins Baggins says:

        Yeah, you do need to bring the information directly to the uspap group.

        They have a hard time using the internet and getting online.

        Highly unlikely to end up here on their own.

        Come on man!

        The below image is entitled; erased by cancel culture.

    • Avatar Dan says:

      Mr./Mrs./Ms/Dear Mouthbreather/Can I just call you Midwest?

      Very well said. While there are valid points in this proposed revision, it is clear what is driving it, and it is not good. This is nothing but the left driving the narrative of bias in everything. You did well to point out the silliness of avoiding words like “typical” “superior”, etc. Everyone knows what they mean, when compared to something else.

      These are the same people who have prohibited the use of any gender-related pronouns in congress and some universities, and will try to force their wokeness into every aspect of our society. The result will be nothing but confusion.

      If you are a biased person doing appraisals for a living you should have been suspended or had your license revoked. And if you haven’t by now you should. The solution to bias in appraisals is to punish it, not to force all appraisers to “get woke” by avoiding perfectly good and useful terms.

      Appraisal Foundation: Please stand up to these bullies.

    • Avatar MAT says:

      Agree. A vocabulary list of words is not necessary and not guidance but more opinion-based from the writer in conjunction with current events. If you want to give advice or guidance, that fine, but telling appraisers what words they can and can’t use is another. Average, Good, Fair, Typical, etc., etc., are all plain English words used to describe something related to the market and not “form filler” words but plain English for people who are not appraisers reading the report. I swear, I’ve never understood why appraisers want to make this more complicated than it has to be. Why don’t we go ahead and require degrees in English literature and jurisprudence…My bad law degree. 100% all this will do as written will ad to the word hit list for the AMC and the lending industry.

      As for the whole thing, Ok, I guess, whatever. I thought we already had a lot of this covered, explained, and burned into every appraiser’s brain across the country (i.e., HUD, FNMA, FHA, VA, Banks, Dodd/Frank, Fair Housing Act etc., etc., etc.).

      • Baggins Baggins says:

        The primates in the tech development departments are in control now. They will copy the words exactly from that guidance and all will instantly become effectively prohibited appraisal language. AI automatic is the ultimate tool to control speech. If it comes down to it you could just write the narratives then print them to image form via web snip or something which can not be auto mined for word associations. The new form seeks to eliminate those type of work arounds though. What I am not doing is policing away my own sensible descriptive language. This is yet another example of the cosmic cobra, and they’ll never stop.

        It is a shame nobody really pushed for individual appraiser licensing for everyone involved in appraisal order distribution, things could have been different. Find one single tech developer or owner of said company associated with the appraisal industry in the entire world whom actually has an appraisers license themselves. That day came and went and in retrospect only solidifies the betrayal of Biggers cashing out instead of just holding on with best practices. Appraisal is going to hell in a handbasket, bounce to day trading and follow legendary dude. Is that prohibited language too? Probably is.

  4. Avatar BoB says:

    The point that the implication in this AO is that an elongated, exceptional amount of explanatory commentary should be provided in each report is antithetical to the GSEs’ massive effort to mold reports into simpleton boxes & short phrases such that the report can be read by a computer & absent significant human involvement is a valid point.

  5. Avatar Seneca says:

    It really isn’t that big of a deal. I have always tended to avoid the use of average, typical, adequate and non-specific quantitative terms like “most” without more description. The other words fit nicely contextually in sentences that a reader would not need more explanation.

    But there could be a battle if the AMCs take it as an absolutely NO use of these words.

    • Avatar Andrew Picarsic says:

      Seneca, I liked your comment because you put a Spotlight on the AMC’s tendency/habit of Stipping for really stupid stuff, while ignoring other areas of substantial importance. Frankly I don’t see how they add anything of value to our process/reports. In a nutshell they are just Check List People. They don’t even know why the comment (or expanded comment)is needed. If they don’t know why, how in the world are they qualified to even critique our reports.

  6. Baggins Baggins says:

    high, low, superior, inferior, equal, average, good, strong, weak, rapid, slow, stable, increasing, decreasing, slightly, typical, similar, close, near, adequate, most, all, none, current, dated, and the like

    That language populates every single competent appraisal report ever developed. Whom ever dreamed up this guidance, agreed it reads like a document pass off from an activist group.

    Francois and Midwest appraiser are on the money with their comments here. What’s going to happen is the idiot tech people running the various systems on autopilot are just going to copy the list of words strung together in the guidance, copy it into their coding parameters, all the language will be struck from the history books and automatically red flagged through automation.

    The problem with adopting varied language which departs from simple terminology is that half the people whom read appraisal reports have very high probabilities of being retarded dullards and they’ll be more confused than before. Did I just break the rules? Whoops. I meant intellectually challenged single cell amoebas with cell phones in cramped office cubicles designed for monkeys in a zoo exhibit. Oh crap I’ve done it again. Call the word police. I am a thought criminal and everyone knows it to be true. Winston, our society will not be perfect, until our language is perfect. The war in Oceana rages on.

  7. Baggins Baggins says:

    If you want a vision of the future, imagine a boot stamping on a human face forever. Power is not the means to an end, it is the end means.

    This is a grotesque watch, but still a gem of cinematic history. Unfortunately, Winston was not available for comment. Do not fear, you will learn to love the new language.

  8. Lines 110 -136 cause me considerable angst. These are PC Speech accommodations rather than legitimate objections to vague generalizations.

    I am 70 years old now. I am in fact elderly by most metrics. Elderly is not pejorative.

    I record who I speak with. Sometimes no names are given. “The lady who provided entry to the subject property also advised me XXX.” Saying person would be vague and ambiguous. In one court case in which I testified, it became an important issue as to whether or not the party that inspected a property w a male or a female because of the two possibles involved, one was a trainee (the male). The issue was whether the party that inspected the property was the same party as the one that signed the report.

    It’s one thing to be free of the defined bias, and quite another to be willing to play the PC speech game just because we have a new administration in DC that has decided to wordsmith the English language and make it gender-neutral by decree.

    I LIVE with a woman. I have a daughter. I am not anti-biased against either gender.

    AOs have a way of being misconstrued to be fact or requirements. The draft has some excellent reminders for us all. It also raised my curiosity as to how ECOA may now be interpreted for appraisers. All credit-granting entities must notify all applicants of adverse decisions. As appraisers, none of us are credit granters.

    Is the renewed focus and emphasis on this a possible prelude to a time when any appraisal that is lower than hoped for (contract price) will require a separate written advisory to the borrowers?

    I’ll revisit the draft again asap, but the prohibitive trend in our approach to ‘acceptable’ language really tempts me to use some very specific, non-PC, unambiguous language of the kind Mrs. Truman (Um I meant a former President’s partner) would not approve of.

    • Avatar Andrew Picarsic says:

      We need a Wokeism Dictionary… This just in; It is now deemed offensive to use Mom and Dad. My point is you can’t win. Submit and assimilate or be banned. We could try to Drive them really crazy by using a thesaurus. Eventually, they will run out of synonyms. Maybe we just need a ‘Woke” Dictionary of Synonyms attached to our reports.

  9. Avatar Dan Stadnick says:

    the Act expressly prohibits appraisers from taking into consideration certain factors in the completion of that assignment.

    Can somebody please reference where in the Fair Housing Act it prohibits appraisers from doing anything? Or even mentions appraisers? I can’t find anything and have been looking at it for about a half hour now.

  10. Avatar Dan Stadnick says:

    Best I found is an interpretation: Discriminate in appraising a dwelling; where is this though?

  11. Here you go:
    §3605. Discrimination in residential real estate-related transactions
    (a) In general
    It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.

    (b) “Residential real estate-related transaction” defined
    As used in this section, the term “residential real estate-related transaction” means any of the following:

    (1) The making or purchasing of loans or providing other financial assistance—

    (A) for purchasing, constructing, improving, repairing, or maintaining a dwelling; or

    (B) secured by residential real estate.

    (2) The selling, brokering, or appraising of residential real property.

    (c) Appraisal exemption
    Nothing in this subchapter prohibits a person engaged in the business of furnishing appraisals of real property to take into consideration factors other than race, color, religion, national origin, sex, handicap, or familial status.


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Advisory Opinion 16, a Game Changer?

by VaCAP Board time to read: 2 min