New USPAP Q&As published March 6, 2025

[Tim Hicks (Texas)]

I understand that a log home and then a wood frame home are the most similar construction comps, but why not include a CBS or brick house on a similar site of acreage in the market area? Just for more support and more indicators -as a fourth of fifth sale comp. (if such sales exist - in a somewhat equivalent price range )

I would have if there had been one of similar size and age, but those three were the most similar I could find that could bracket the subject by age and lot size. They just happened to be wood frame homes. I did not have a plethora of sales to choose from was my point. Oh, I could have used a couple of sales $500,000+ higher, but if a property is selling for $600,000 are $1.1-1.3 million dollar properties really similar?

 

[Terrel L. Shields]

wood frame homes.

Imagine the angst of using or valuing the metal frame "barndominium' ...

'Appraiser Experience' as the source for building costs..

Unless that appraiser is skilled at bidding construction jobs, I laugh at seeing that or "local costs" because A-they are too cheap to buy a cost book, or B- too lazy to do the actual work. I can extract the cost from almost any good sale around here from new construction sales. And almost always the cost book is below that. So, what is the difference? The difference is EP - the profit of the builder-developer. They are not building these for free.

One buyer would pay 25k more, another 15k more, another 30 k more

Well, not really. The seller is involved in that. If they want $25k more, then they ask it and expect it and the buyer simply has to choose yes or no. And that buyer is not going to go from property to property trying to limit what they spend for a pool. The art of the deal comes into play. The seller is unlikely to disclose what they think the individual components are 'worth'. The buyer is also not set in stone on a price probably as pools vary. A buyer might opt to pay much more for an indoor or heated pool, or a pool room with showers, or other pool side accessories over simply a small water hole in the back yard. Or, the buyer may assume the zero-edge pool with waterfall is a feature that costs more than they are willing to pay even when they don't know how the seller has valued it in the overall price. The price of the overall package will influence the decision to buy.

 

[Tom D]

You rural appraisers should be paid at the top of the range. Unfortunately i may be getting as much for my little urban row homes. But i have a lot of respect for yous.

 

[Non Sequitur]

I get that an appraiser should have more than "I pulled it out of the air" in the work file. But this, IMO, is just another step in an ongoing and concerted effort to sully residential appraisers, especially those in the mortgage origination space. When I read "No, experience cannot be a recognized method or technique or a substitute for relevant evidence and logic" my takeaway is the PAREA noob, with ZERO field experience, licensed in multiple states, working in a team with an over seas assistant dropping charts/graphs into reports, never interacting with market participants, is just as good as any 20yr veteran.

How about a Q&A covering whether or not AMCs with staff appraisers is safe and sound practice?

 

[shrubberyvaluation]

Even judges have to adjudicate the law as written

And what happens if they don't. I hear a lot of stories of judges not caring about the law even up to the supreme court sometimes.

 

[Andy Taylor]

Ultimately every appraisal is "based on experience". Especially due to the imperfect nature of the real estate market.

An appraisal is an opinion, which by its essence an opinion is based on one's lived experience(s).

When you have your 3 or more adjusted comp values you ultimately make a judgement (based on experience) of what the final value is and is that value credible. I would venture to guess that even when Bert runs his program on a property and each comp is adjusted out to the same dollar amount he still has to look at the output and say to himself, "(Based on my experience), does that number appear to be correct?"

Why do you think lenders/AMC's don't want appraisals signed by only a trainee.

Most of us long in the tooth appraisers can probably drive by a property and opine a value within an pretty reasonable range "based on our experience". Or we know that old appraiser that can. Or that local long time investor that doesn't know a SCA from a MARS program who can tell you what a property is worth.

 

[George Hatch]

And what happens if they don't. I hear a lot of stories of judges not caring about the law even up to the supreme court sometimes.

A lot of criminal cases get dropped or plea bargained because the prosecuting atty doesn't think they can clear the burden of proof to get the conviction. To a certain point we expect that out of our system - discretion over expediency. But when a licensee is required by the state law to adhere to USPAP in those assignments and a judge blows that off on the basis of their personal discretion then that's not how the legal system is built to operate.

"I don't care what the law says or about the jurisdiction of the state appraisal board exercises over your state license because I make the rules that you have to follow" ​

 

[DWiley]

Ultimately every appraisal is "based on experience". Especially due to the imperfect nature of the real estate market.

An appraisal is an opinion, which by its essence an opinion is based on one's lived experience(s).

When you have your 3 or more adjusted comp values you ultimately make a judgement (based on experience) of what the final value is and is that value credible. I would venture to guess that even when Bert runs his program on a property and each comp is adjusted out to the same dollar amount he still has to look at the output and say to himself, "(Based on my experience), does that number appear to be correct?"

Why do you think lenders/AMC's don't want appraisals signed by only a trainee.

Most of us long in the tooth appraisers can probably drive by a property and opine a value within an pretty reasonable range "based on our experience". Or we know that old appraiser that can. Or that local long time investor that doesn't know a SCA from a MARS program who can tell you what a property is worth.

There are two main things that make an appraiser's opinion worth someone actually paying for it: (1) the independence, and (2) the fact that it is based on evidence and logic. Without the evidence and logic, its just another opinion.

Certainly evidence and logic obtained via prior work (i.e. "experience") is part of an appraiser's tool box. But it is the evidence and logic that is the key - not the mere fact that prior work was performed. If the prior work was not performed correctly, or it is not recent enough to still be relevant, then the experience is of little value.

An appraiser might, "based on prior experience" (from many years ago) use a GLA adjustment rate of $40/SF for a condo unit where current data shows should be adjusted at over $200/SF. That is why the evidence and logic must be cited, and not just the notation of prior experience.

 

[Zoe]

Great post - the last paragraph is well written; however, IMO, it would be far better to write the "comparables in support of the market value opinion."

The MV definition exists to frame the terms and conditions of the price the transition should bring - ( the $ amount the property "should" sell for if it met certain sale conditions outlined in the definition of value used ). The MV definition lays out the terms of sale and buyer and seller motivations. The price part it references is not literally the opinion of value - the opinion of value is the appraisal (USPAP )

MV definition is very unique and only definition that requires H&B use analysis as far as I know.

I like the definition of value as written like 1004. I have no problem with it.

 

[Zoe]

There are two main things that make an appraiser's opinion worth someone actually paying for it: (1) the independence, and (2) the fact that it is based on evidence and logic. Without the evidence and logic, its just another opinion.

Certainly evidence and logic obtained via prior work (i.e. "experience") is part of an appraiser's tool box. But it is the evidence and logic that is the key - not the mere fact that prior work was performed. If the prior work was not performed correctly, or it is not recent enough to still be relevant, then the experience is of little value.

An appraiser might, "based on prior experience" (from many years ago) use a GLA adjustment rate of $40/SF for a condo unit where current data shows should be adjusted at over $200/SF. That is why the evidence and logic must be cited, and not just the notation of prior experience.

I told you that you earned your respect on some topics.


I told you the areas you don't deserve respect from me. LOL