Go Get Em Appraisal Institute! The AI Throws USPAP in the Face of the HVCC
The Appraisal Institute http://www.appraisalinstitute.org has come out swinging against the HVCC and the critical problem of ‘geographic competency.” Simply put, an appraiser, regardless if they are a member of the AI or not, is REQUIRED to be competent and knowledgeable about the market they are working in. USPAP (the Uniform Standards of Professional Appraisal Practice) require that the appraiser to be ethical have the experience and knowledge necessary to do the job correctly.
Common sense, isnt it?!
It is, but the Appraisal Management Firms do not agree, simply because competence costs them money. Unfortunately their cheapness is killing legitimate deals because they are using inexperienced appraisers who simply put do lousy jobs.
Before I went on vacation I had sold a coop apartment in the area, and the appraiser called me to do the analysis. The first thing I ask (and frankly I have asked this for years) is; “where are you from?” Hopefully the answer is Westchester or the Bronx. In the case, the answer was STATEN ISLAND. Well I have nothing against the people who live there, but when I was a commercial appraiser, if you were bad you did penance by doing a job on Staten Island. It is a market unto itself, and the appraisers there have no idea about Westchester. The appraiser claimed he had ‘worked in Westchester before.” When 10 years ago? He would not say.
Recently the HVCC was supposedly modified to encourage geographic competence, but obviously it had not filtered down to this deal. I made a few calls to complain, threw out the word USPAP like a shield 
and got a different appraiser. I had no idea who I was going to get, but I did get a local Westchester appraiser who has appraised some of my deals in the past, and i knew him to be a very competent appraiser. There is an important point to be made here; much has been made about ‘influence” and ‘pushing” to make a number. But if you have a good competent appraiser, and the deal is reasonable, in my experience you have nothing to fear. So a competent, ethical appraiser did the job, and I am assuming that a FMV was determined that worked. Not too difficult!
So read on, and listen to the very tough words of the Appraisal Institute. Bravo to the AI!
Appraisal Institute Addresses Geographic Competency
USPAP further states: “In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.”
“As the nation’s largest and premier real estate appraiser association, the Appraisal Institute takes seriously any instances, no matter how rare, of appraisers violating ethical or professional standards,” Amorin said. “We have reminded our members that violations will not be tolerated. I encourage non-members to join us in speaking out against any appraiser who violates the standards of our profession.”
In addition to USPAP, Appraisal Institute members are required to abide by the organization’s Code of Professional Ethics, which states: “It is unethical to fail to properly identify the issue to be addressed and [to fail to] have the knowledge and experience to complete the service competently prior to agreeing to perform any service …”
“The Appraisal Institute expects and demands its members to strictly adhere to its Code of Professional Ethics,” Amorin said. “We will take disciplinary action against any member who violates our organization’s geographic competency ethics requirement. Non-member appraisers should strive to achieve the same level of ethical behavior.”
Information on the Appraisal Institute Code of Professional Ethics, including complaint processes, enforcement procedures, and enforcement statistics is available at www.appraisalinstitute.org/about/ethics.aspx .
