New USPAP Q&As published March 6, 2025

[CGinMN]

Many residential appraisers know how to work a grid and refine their adjustments to tighten a range and get to a credible result without knowing to describe what they’re doing as sensitivity analysis. Some of these appraisers might even call this adjustment via experience because it is a technique learned and refined over many years. When reviewers read “experience” I think they can confuse a gap in technical language with a gap in technical proficiency. There is both, but again the problem isn’t with the process, it is with either the inability or unwillingness to accurately characterize how they got there, or just plain old PFA, neither of which this Q&A addresses.

 

[CGinMN]

Some quants will say we want to move past inside-the-grid adjustment development more objectively quantifiable adjustments. There are pros and cons to this, as we’ve discussed. But we need a generation of appraisers to change that. In the meantime, in-grid adjusting is probably the most commonplace method for adjusting in GSE work, and it’s pretty much where everyone starts.

 

[glenn walker]

The

My issue with the Q&A is that it narrowly defines “experience” with loaded language including “personal views,” “subjective judgement,” “preconceived notions,” and something that is devoid of “evidence and logic.” I doubt there is any appraiser who would characterize their usage in this way. Experience as appraisers use it, is never personal, always professional. Experience could be viewed as a collective accumulation of professional knowledge, including analyzing evidence, that informs one’s judgement.

The Q&A points out that assignment results by definition cannot be developed from an appraiser’s experience gained outside the assignment. OK. However, when an appraiser has performed multiple data analyses previously, to the extent that they are an expert, and they then draw on that accumulation of knowledge (experience) to inform their professional judgment as it relates their current assignment, that is most certainly appropriate. And of course once they make the decision to incorporate that knowledge into the new report, it becomes an assignment result. Whether the GSEs accept it or not is a user issue that USPAP should not weigh in on.

The problem is that certain users may not like to see “experience” because it is not specific and it is abused by unethical appraisers. But the same could be said of “paired sales” when there are none, so this doesn’t solve any problem. When making professional rules we must start from the assumption that appraisers are acting ethically and professionally, not unethically and personally. When an ethical appraiser says they did not analyze new data for this assignment to determine a park adjustment, and their adjustment is based on an accumulation of knowledge gained by previously analyzing data - or “experience,” in short - that should be acceptable IMO

The problems with the Q & A or FAQ
is they state their answers may not be USPAP and their at best opinions .

Now if some shady attorneys didn't come up with that one i have a train to nowhere for sale.

 

[J Grant]

Very long ago in the state of Pa i had to be a real estate broker to be able to do appraisals. So at that time they must have thought that the qualitative experiences were very important.
The problem is that when i was a r.e. broker the buyer never bought the house exactly the way an appraisal thinks they do. It was all about the hot button. When you hit the hot button and the wife loved it. Well, there were no precise $ adjustments for items. So in effect, the 1004 is a hybrid between buyer's emotions and trying to prove adjustments. An avm takes out the emotions completely, and tries to do it by numbers. When avm is doing the majority of appraisals, we will see which is, in reality, is the better model to determine value. But most of us will not be coming back.

Interesting post!
I sold RE for over 5 years before becoming an appraiser, and my experience in sales was invaluable in undertaking buyer and seller motivations and the property's position in the market.

As you note, to a specific buyer, THEY might pay more for it from a hot button emote or specific need than most buyers. This is why, for appraisals, the market value definition specified it is what the property should bring in a transaction with a typically motivated buyer ( not the outlier buyer). Let's say the subject is a house with a loft and a pool. Most buyers want teh pool and the house and don't care about the loft that much. But to the one artist buyer who always dreamed about having a loft studio, the house has extra appeal. But as the appraiser, the question is, would most other buyers pay X the same price for this house since most buyers per data ( and experience ) don't care about a loft or even see it as a negative, being open to close or only reaching through a spiral staircase?

 

[Mark K]

Or it could be that appraisers that don't like the term "...in the appraiser's experience..." are jealous because they don't have enough to understand that it has a credible place in some reports.

 

[Joe Flacco]

This is typically how I do site and busy street adjustments. Subject property was in the $2 million range fronting a two lane slightly busy street.



Above is the adjustments in the report.



Above is how I typically like to communicate what I am looking at.

 

[Joe Flacco]

Now for differences like actual age, I typically like to address that in the selection of comparable sales. so if I am appraising a 90s' home, and my comps are all built between 1990 and 1999, the actual age in the report might range from 26-35 years old.

That is going to get a zero adjustment in my reports. Any differences in condition, updating, maintenance is addressed by the condition adjustment.

 

[Joe Flacco]

Condition adjustments are not that difficult. If you have two comps in the report that are C3 and two comps in the report that are C4, then most likely the difference in condition is reflected in the sale prices. It is really easy to explain that adjustment.

"The condition adjustment is estimated based on the comparison of comparables one and four, with comparables two and three." You might also say that you considered the cost of updating if you thought about it in that way.

 

[CGinMN]

This is typically how I do site and busy street adjustments. Subject property was in the $2 million range fronting a two lane slightly busy street.

View attachment 97621

Above is the adjustments in the report.

View attachment 97622

Above is how I typically like to communicate what I am looking at.

Less than 5% of GSE appraisers put this kind of summary into their reports. None of their clients have ever paid for it or demanded it. They never had to learn how to summarize what they did.

Now for differences like actual age, I typically like to address that in the selection of comparable sales. so if I am appraising a 90s' home, and my comps are all built between 1990 and 1999, the actual age in the report might range from 26-35 years old.

That is going to get a zero adjustment in my reports.

This is a good example. How do you know it is $0 if ages are different? What you say is data analysis another appraiser might just say, my logic and experience tells me this.

 

[Joe Flacco]

This is a good example. How do you know it is $0 if ages are different? What you say is data analysis another appraiser might just say, my logic and experience tells me this.

That is why what Tim is saying is stupid. I have addressed the actual date built which also includes design trends around the time it was built in the selection of the comparable sales.