USPAP Compliance & Hybrid Appraisals
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WHO does the SUBJECT INSPECTION?
Some appraisers have questioned the name ‘Hybrid Appraisal’ because the requesting client WON’T USE THAT NAME for the product.
When they call or email you, they’ll say something like “We have a really fast appraisal for you to do that you can do on your desktop without leaving your office.”, or “Can you do an exterior appraisal for us?” or they might identify it by the ‘name’ that client uses for the product.
The FIRST question you need to ask is simple: WHO does the SUBJECT INSPECTION?
If they say ‘someone else does that’… then you need to “think twice” about doing the assignment.
You need to be extraordinarily cautious and ‘think twice’ about completing Hybrid Appraisals (HA’s) – the kind of reports being promoted by multiple suppliers who claim these are a way to make ‘easy money’ while doing them dressed in your bathrobe and bunny slippers. The primary selling point is you don’t need to leave your office.
YOUR Compliance with USPAP is a critical factor at play with these HA’s. No ‘form’ complies 100% with USPAP.
Compliance with USPAP is square on the back of the appraiser… no one else. So these new HA’s have been developed and promoted by lenders and their AMC’s as a way to ‘speed up the appraisal process and spend less money’ to arrive at an appraiser’s stated value conclusion for a certain property – without any real regard for the appraiser’s mandatory compliance with USPAP.
I’ve had the recent pleasure to ‘discuss’ these kinds of reports with a state regulator.
HA’s involve a two-step process.
- Step 1 is the subject inspection – done by someone other than the signing appraiser. This is far different than the SOW on the GSE Exterior-only report forms where the appraiser does everything. This “inspection” is done by an unidentified person called a ‘Field Inspector.’ Inspection info is uploaded to the client web site, and made available to the appraiser.
- Step 2 is the appraiser obtaining the subject inspection data (done by someone you don’t know), agreeing to the validity and accuracy of that data (per the SOW & EA on the form), then pulling comps from your local MLS, gridding those into the report, making adjustments (if required), stating a value, then signing and delivering the completed HA back to the client.
There are two principal USPAP compliance issues with these HA’s:
- the person acting as the ‘field inspector’ is actually performing Appraisal Practice as defined by USPAP. Some may dispute that statement. But without the field inspector’s inspection data, no actual Appraisal can be completed by the Appraiser – because the appraiser is not engaged as the ‘field inspector.’ It’s my guess that the majority of ‘field inspectors’ ARE NOT licensed appraisers. As such, an Appraiser who allows some unidentified person to perform Appraisal Practice in the preparation of a report is in violation of USPAP. (I know about an appraiser who had to forfeit his license back to the state for this very reason.)
- Having someone besides the licensed appraiser contribute Significant Appraisal Assistance, without identifying that individual in the report, is also a USPAP violation charged back to the appraiser who signed the report. Significant Appraisal Assistance is discussed in FAQ #248 in USPAP 2016-17. INSPECTING the subject property IS considered to be an action that provides Significant Appraisal Assistance.
Don’t let the salespeople and others promoting these HA products try to persuade you otherwise… just because you can do these in your bathrobe, bunny slippers, in your basement for $50-$75 a pop.
Your compliance with USPAP is absolutely paramount in YOUR conduct.