Removing the Definition of Personal Inspection
Why is the ASB proposing to remove the definition of Personal Inspection?
Several days ago, an appraiser posted the following comment which we have decided to publish as a free-standing post because we believe it deserves attention:
Amazingly, while these are horrible – everyone seems to miss the real issue that will hit us all in 2023.
As of 2023, if the ASB gets its way in a few weeks, the word “inspection” or “personal inspection” will no longer be defined in USPAP. That means they don’t even have to play this game. “Desktop” appraisal is just a stopgap until 2023. After that, they can say looking at pictures on a screen constitutes an INSPECTION. It’s no longer a desktop or a hybrid, it’s a “full inspection”. Because the ASB says “inspection” should mean the “common dictionary definition” of the word – which is ANYTHING – since the dictionary says it is “to examine closely” and doesn’t say thing about being PHYSICALLY PRESENT. Sure, the ASB gave themselves a nice bit of CYA that you can bury a line deep in the Scope of Work about what the inspection was, but the vast majority of homeowner and homebuyers are going to get appraisals that no longer say “Desktop” or “Hybrid” but rather LOOK like “full interior inspection” appraisals but the appraiser never set foot in the property. A few years ago we would have called that FRAUD.
How many of you commented to the ASB? THIS is where the power is and we’re doing nothing about it. TAF needs its statutory authority removed ASAP.
Second Exposure Draft of Proposed Changes for the 2023 USPAP and Comments
Definition of Personal Inspection
The ASB has proposed to remove the definition of PERSONAL INSPECTION. Removing the definition of personal inspection will make it possible for the common dictionary definition of “personal” and “inspection” to apply to each word. Without a definition, the client and the appraiser can use the common dictionary definitions to understand the meaning of the phrase in the context of each specific assignment.
If adopted, there will no longer be a definition of PERSONAL INSPECTION in USPAP…
PERSONAL INSPECTION: a physical observation performed to assist in identifying relevant property characteristics in a valuation service.
Comment: An appraiser’s inspection is typically limited to those things readily observable without the use of special testing or equipment. Appraisals of some types of property, such as gems and jewelry, may require the use of specialized equipment. An inspection by an appraiser is not the equivalent of an inspection by an inspection professional (e.g., a structural engineer, home inspector, or art conservator).
We agree with the decision to remove the term “Personal Inspection”. We would add the following to this paragraph: “With the advent of new and improved digital technology, the appraiser has a variety of sources to obtain subject property characteristics without personally inspecting the property. Some of these sources include using a homeowner-assisted phone application, a trained third party to provide photography and/or video, MLS photos, prior appraisal reports on the subject, satellite images, and other associated data the appraiser deems reliable. All these sources can be used in combination to provide basic information on the subject property characteristics, features, condition, and quality. The appraiser would be responsible for clearly describing the type of inspection performed and the sources used in a manner that is not misleading and would produce credible results based on the scope of work for the assignment.”
Appraisal Institute comment:
The term “inspection” has been in USPAP, and in the appraisal body of knowledge, for decades. The definition is clear as to what an appraiser’s inspection is and is not, and Advisory Opinion 2 serves to further clarify. While an appraiser may choose to use a different term, we do not think it is necessary for USPAP to change the term. We do not support its removal.
We are opposed to deletion of this definition, and instead favor a more nuanced approach that considers the factors we discussed previously. Some examples may include:
- Technology Assisted Inspection: The process of the person performing the appraisal utilizing technology (such as drones, phone/computer video, etc.) when providing a valuation service.
- Inspection by Others: Utilizing an individual other than the person performing the appraisal to perform an inspection within a valuation service.