COVID-19 Disclaimers in Appraisal Reports

COVID-19 Disclaimers in Appraisal Reports - Appraisers BlogsLet’s focus on the big rocks, not the small rocks in this time of crisis

I shared my firm’s disclaimer for the Coronavirus to a group of appraiser colleagues of mine:

Extraordinary Assumption – COVID-19 was identified in China in December 2019 and quickly spread across the globe, including the U.S., evolving into a pandemic. As a result, the Federal Reserve cut the federal funds rate on March 3, 2020, by 0.5%, making the threat of the virus tangible to most housing market consumers. The Fed cut the federal funds rate by another 1% on March 15, 2020, to offset the expected severe economic impact as consumers began to pull back. While it is too early to extract the empirical implications for the housing market as a result of the Coronavirus, the client is aware that this valuation assignment relied on most if not all market data generated before conscious consumer awareness occurred on March 3. We will continue to monitor the market for potential impact on trends.

While it is great that the Appraisal Institute came out with recommendations as well, I took issue with their point that we should not call it an “extraordinary” assumption. An AI member who has been shunned by AI that was in this group sent me a private email, savagely attacking me and got very personal. I assumed he was just drunk and angry at the world. I thought to myself, this person represents the worst of our industry under the guise of being a professional, and represents why many of our challenges as an industry are brought about by not being able to see the forest for the trees. Yes, appraisers like this can be our industry’s own worst enemy.

In this case, extraordinary or not, the point is to get the message out to the reader of the report RIGHT NOW.

In the meantime, I have had many appraisers, and even banks, send me disclaimers they are seeing. Here are a few more:

Coronavirus (Covid-19) Pandemic Appraisal Ramification Alert
The country and much of the world is currently in the midst of navigating the impacts of coronavirus. Valuing real estate as of a current date presents unique challenges since appraisers primarily rely on recent historical data as well as trends and forecasts (which are particularly tenuous in the current environment) in ascertaining value. In these unprecedented times, it is conjectural to project what sustained effect there may be on the economy and the market value of the real estate in the coming weeks and months. That being said, re-engagement of an appraisal in the near future may be very prudent.
The date of value in this assignment is subsequent to emergency declarations regarding the Coronavirus (COVID-19) in March 2020. The scope of this appraisal assignment does not include the measurement of any effect of these events on the real estate market or on the value of the subject property. Therefore, the value opinion and other conclusions expressed in this report are subject to the extraordinary assumption that these events have had no effect on the marketability or market value of the subject property. The client and intended users of this appraisal are cautioned that if this extraordinary assumption is incorrect, the value opinion and other conclusions expressed in this report could be significantly different.
NOTE: This appraisal is dated as of 03/16/2020. On 03/11/2020, a Utah Jazz basketball player tested positive for the COVID-19 illness, the game was cancelled and on the same evening the NBA season was suspended. On the same night, Tom Hanks and his wife announced that they had also tested positive for the SARS-CoV-2 virus. These three events are credited for bringing this illness to the attention of the American people. Within hours, schools of all levels were dismissed. In the following days, Americans were advised to remain at home and businesses were shuttered. The news and developments around the illness are constant daily and the US Government is announcing monetary aid to citizens to offset the economic downturn. This illness is unprecedented in modern times and as a result, it could have far reaching effects on economic and market conditions or trends but since the time from public recognition to the appraisal date is only 5 days, changes in the current market have not been measured to date and cannot be determined for this appraisal.
Jonathan Miller
Image credit flickr - Howard Lake
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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17 Responses

  1. Avatar Carl says:

    This was from LIA:

    “The global outbreak of a “novel coronavirus” known as COVID-19 was officially declared a pandemic by the World Health Organization (WHO). The reader is cautioned, and reminded that the conclusions presented in this appraisal report apply only as of the effective date(s) indicated. The appraiser makes no representation as to the effect on the subject property of any unforeseen event, subsequent to the effective date of the appraisal.”

  2. Avatar Dave says:

    I note in my reports that if the COVID-19 kills a large percentage of our population, it could affect the demand for real estate, hence have an adverse affect on values. Is this an accurate statement to make to cover our backsides?

    • Avatar Nick says:

      It’s not just deaths due to Covid-19. There’s also the economic impact due to force majeure clauses being activated, tourism/hotel/restaurants being decimated, unemployment going from ~230k – ~3.3 million, the whiplash to residential mortgage rates, and the unknown about the virus. Last I read, we’re at around 8 strains around the world. There’s a lot of unknowns and a lot of economic Black Swans. The effects are already coming into play. We have been adding a EA in our reports and also stipulating that we reserve the right to come back and inspect the inside of the property.

      If homeowners fall on the wrong side after dust settles they’re going to be looking to blame someone. The banks certainly aren’t going to protect you. Protect yourself, use an EA if you’re not going into the house for a site visit (not inspection – unless you’re a home inspector), and make it clear in multiple points so as to not ‘mislead’ – that new favorite USPAP jargon – that economic changes are unprecedented and may positively or negatively impact value following resolution of this pandemic. Pandemic clause perhaps? Act of God to the economy? Who knows…

      Protect yourself

      • Baggins Baggins says:

        Take the risk if you want. The logistics of a follow up are not going to be readily available. You will instead be turning to insurance providers for coverage. These objections will surface long after funding is finalized. You can find me doing full service complete inspections or doing something else.

        As I mentioned to a realty agent the other day regarding these pending economic disruptions. As an appraiser I have the easy side of this. It will be the agents whom have to navigate the front lines of these pending behavioral and economic changes. Then I’ll just follow up with standard data analysis and regular measurements of market value. We’ve always stood in a reflective position where we measure the reaction of external influence, and that data is never instantaneous. What’s new?

  3. Avatar SB says:


    Mortgage Lenders are now beyond desperate.
    They have gouged us for over a decade…
    They have bragged how busy they are.
    They have stolen billions from us via appraisal waivers.

    If they use a national AMC …tell them you simply cannot help them.

    • We’ve been working really hard to get fees to a reasonable place over the last 2 years. In CA the VA pays $600 starting for a 1004. This is currently our base fee.

      No need to accept orders at $400 or less which was the fee when I started in this industry 20 years ago!

      Companies are paying and we are still a week and a half out on available inspections.

      You don’t have to take shit fees anymore!

      • Baggins Baggins says:

        One was never forced to work for substandard fees in the first place, but many elected to do so anyways. These arguments are lacking gravity without direct acknowledgement if a third party servicer is involved or not. Because if they are present, they’re not working for free. Thereby indicating your X fee is actually still behind the curve, because the consumer’s fee has most certainly gone up. You can’t escape the financial incentive to drive down appraisers fees, drive up consumers fees, or both, for variable unearned fee profit. The only way to win, is not to play. Additional concerns with amc’s include the inevitable desire and propensity to retract any fee gains in the future when they once again, gain the upper hand and leverage appraisers against each other. When dealing with an amc, there is no such thing as permanent gains in terms of appraisal fee correction. For consumers though, there certainly is. Their fees go up and up and have done so for several decades. When dealing with unnecessary third party middle managers, cost savings are not returned to consumers. When you finally get your fee to an acceptable level with an amc, you’ve driven up the fees to consumers that much more. Give yourself a raise, and in turn, give the amc one too. Then when the opportunity presents itself, they’ll fee shop for that additional few hundred in unearned fee rake. That’s what has happened over the past decade and there is no indication that will change. Pick a side.

      • The fees are crazy in the bay area as many AMCs want fee quotes and turn times. Many get passed around for a week and someone takes them for $300-400 and two day turn time. I guess they get what they pay for. I think that $400 is the minimum for a drive by and $500 for a standard sfr and more for complex sfr. Units should be $800-1,000. I was getting $350 standard sfr back in the 1990’s from fha and conventional lenders. Most of my business is non-lender and I do some commercial. Stay safe and get a good fee.

  4. Baggins Baggins says:

    This may have a severe and negative effect on the real property markets. Or it may not.

    We are not just watching political theater, now we are living it.

    QE infinity is going to be the bucking bull ride of the century. Central planning just unraveled before our eyes, yet the masses continue to come back for more.

  5. Avatar David says:

    Don’t act like robots on the lowest level of the food chain. Step up and take control and make sure you are paid well for the collateral verification – as in very well – taking all the risk – no brainer!!!!!

  6. Retired Appraiser Retired Appraiser says:

    This song is dedicated to all of the hard working appraisers and Realtors out there risking their lives for the rest of us.
    “Life In Quarantine”

    • Baggins Baggins says:

      My new life goal is to stay far far away from everyone else, live in fear of my fellow man, adapt to being less social. As a recovering germaphobe I can tell you that this narrative can’t hold up after the illness subsides. When people realize that despite their best efforts they can not stop a microbe, they’ll stop being concerned with the microbe.

      Appraisers risking their lives and being willing to rewrite hundreds of years of traditional checks and balance bureaucratic systems to make sure another loan goes through the system today. I’ve heard of refried refi’s but this takes the cake. Be careful what you wish for because in this time of treasuries open pockets and 5 foot high emergency bills passed through without quorums, without recorded votes, and without anyone actually reading them, attaching every special interest pork rider alongside, it’s important to not be naive. These allowances are going to be eventually recognized as permanent process changes. And just like that, the bubble went pop!

  7. Baggins Baggins says:


    Time will tell. Called it.

  8. Avatar Marion says:

    Has any state issued a stay at home order that is not applicable to buyers and sellers?

    For those “market value” buyers touring 5-10 properties until they decide which property to buy and move their families into, who is providing them hazmat suits?

    Oh, a buyer coughed in my home, who do I sue over the mental anguish for the next 3 weeks until we know if someone in the home is sick enough to get a COVID test?

    The URAR definition of “market value” should be consulted and referenced continuously through any report these days, especially; The most probable price which a property should bring in a COMPETITIVE and OPEN MARKET UNDER ALL CONDITIONS REQUISITE TO A FAIR SALE.

    How many homes are buyers currently touring before they decide which one to buy and what price?

    • Baggins Baggins says:

      MLS guys are deciding to jump in the game. Open houses are no longer listable in the MLS systems in affected areas (or emergency dec areas, something like that). And special new showing rules. Big corporate tech saves the day again, protecting us from ourselves.

      Now this is very interesting. I’m about to post the oldies but goodies song link again…

      Guess who’s back….. Implodometer! We’ll see what happens with that.

  9. Avatar Dave says:

    You are absolutely correct Marion. We are all in new territory with this pandemic.

    I’m not sure anyone knows how this is going to affect value and marketing times, but common sense says it’s going to be bad for real estate. If people can’t view homes with intent to purchase, is this really an OPEN market. Time will tell, but all an appraiser can do is state the facts. Note there is a pandemic and the effect is yet to be determined.


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COVID-19 Disclaimers in Appraisal Reports

by Jonathan Miller time to read: 3 min