Chapter 2: Regulation of Appraisal Profession and Appraisal Standards

Appraisal Foundation

*   FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989)

*   Under the Appraisal Foundation two sub-agencies were created

*   Appraisal Standards Board

*   Appraisal Qualifications Board

*   State Certifications and Licenses (state dependent)

*   Registered--allows regulatory control while gaining experience. Must work for Certified Appraiser.

*   Licensed appraiser (residential less than $1,000,000 and complex less than $250,000)

*   Certified Residential

*   Certified General

Uniform Standards of Professional Appraisal Practice (USPAP)

Standard 1--The practice of real property appraisal

*   Requirement of professional practice (due diligence)--avoid material errors

*   Use of appropriate techniques

*   Fees may not be based upon value outcomes.

*   Appraisers may not perform appraisals for which they have no experience without proper disclosure.

Standard 2--The reporting of real property appraisal

*   Appraisals should communicate clearly to the client--be legible, using proper grammar, and a non-technical vocabulary

*   Appraisers may not disclose any material fact or conclusion from an appraisal assignment except to the client unless required by a court or regulatory agency.

*   Appraisal reports and records should be retained for at least five years and at least two years after final disposition of any judicial proceeding where testimony has been given.

*   Appraisals must contain certification statement.

Other USPAP Standards

*   Standard 3--The practice and reporting of real property review appraisals

*   Standard 4--The practice of real property consulting where an opinion of market value is not rendered.

*   Standard 5--The reporting of real property consulting where an opinion of market value is not rendered.

*   Standard 6--The practice and reporting of mass real property appraisal (property assessments)

*   Standard 7--The practice of personal property appraisal

*   Standard 8--The reporting of personal property appraisal

*   Standard 9--The appraisal of businesses

*   Standard 10--The reporting of business valuations

Professional Conduct

*   Always do professional work--type of appraisal form (letter, form, narrative) should not drive the amount of work done in support of value estimate.

*   The fee should not influence the amount of work done in support of the value estimate.

*   Should not accept unfamiliar assignments without "teaming" with a more experienced appraiser, or, if none available, full disclosure to the client of the appraiser’s inexperience.