New USPAP Q&As published March 6, 2025

[Zoe]

So-called "hybrids" are far from a new concept. The only thing new is their consideration (and now adoption) for the GSEs. I actually did desktops and hybrids (though they were not called "hybrids" then) when I was in the field. How I priced them then was no different than how I would price them today - analyze the time required, consider opportunity costs, and price accordingly. That is just business 101.

Service providers always wish they could charge more, and service users always hope to pay less. It is the market that sorts out where the balance point is.

I got you. Is AMC involve and is it disclosed on truth in lending documents?

I have to ask this at the risk of being in timeout and obtuse. Have you ever promoted separation of fees on truth in lending disclosures?

 

[timd354]

Comp 1 adjusted to $300,000 before considering differences for windows. After considering this difference it adjusts to $300,000 + $X. Its price has been modified (adjusted) by an unquantified amount (qualitative).

Comps 1 and 2 adjusted to $300,000 and $305,000 before considering significant differences for windows. Comps 3 and 4 adjusted to $320,000 and $320,000 respectively. They both have new windows, but also new roofs and Comp 4 has new HVAC as well, which the subject lacks. Adjustments made as follows:

Comp 1 - $300,000+
Comp 2 - $305,000+
Comp 3 - $320,000-
Comp 4 - $320,000--

I’m not sure why, but you seem to be arguing there’s no such thing as qualitative adjustment, only qualitative analysis?

I think the disagreement between us is based on how each of us view what an adjustment is. In my view, simply adding an indicator or a "+" or "-" (or "--") is not an adjsutment to the comparable sale that did not change the sale price of the comp in the report. Rather adding a plus or minus after the sale prices of each comps is nothing more than reporting the result of the appraiser's qualitative analysis that the comp compares either more or less favorably to the subject proeprty as the result of differences in some proeprty attribute(s). Apparently you view that as adjusting the comps, but I don't view it that way.

 

[timd354]

That is absolutely not true.

If you want to you can put 3 comps in the report that have differences, make no adjustments at all, and then reconcile the sales comparison approach by summarizing which comp is the best and why.

It is perfectly acceptable to not make adjustments but to consider the differences in the reconciliation.

That would be perfectly acceptable if you are reporting the appraisal in a narrative report or using a non-GSE form, but if you are using the GSE form, you are signing a cert that say you did make adjustments (it is possible that all of the adjsutments could be zero if you had 3 very similar comps), so if you are not doing that, then you are signing a certification that is false, which most state boards would probably find is a USPAP violation.

Hey, I am not saying that I like or agree with the all of the pre-printed certifications on the GSE appraisal forms, I am just reporting what is in the certs and what you are certifying that you did everytime you sign an appraisal report that uses one of those forms.

FYI, I suspect that some appraisers are not at all cognizant of what is actually in the certification that they are signing.

 

[timd354]

All of which begs the question...do you need supporting data and analysis for the lack of adjustments? It makes sense prohibiting experience based, subjective adjustments as requiring data and analysis for all adjustments that were made.

No adjustment for site size? Prove that no adjustment is necessary.
No adjustment is made or necessary for sizes less than 100 s.f.? Prove it. (Personally I always thought this is a lazy one and likely incorrect)
Etc.

Proving that no adjustment is necessary should be just as important as proving the adjustments that were made. That is, it should be for those in the 'prove all adjustments, no experience allowed' crowd.

USPAP does not require an appraiser to "prove" the amount of an adjustment or the lack of an adjustment. What USPAP requires is that an adjsutment (or no adjustment) is credible and based on accepted methodologies. At the end of the day, the amount of any adjsutment (or lack of an adjustment) in an appraisal report is not a provable fact, but is the expression of the appraiser's opinion and that opinion needs to be based on a credible analysis.

 

[CGinMN]

I think the disagree between us is based on how each of us view what an adjustment is. In my view, simply adding an indicator or a "+" or "-" (or "--") is not an adjsutment to the comparable sale that did not change the sale price of the comp in the report. Rather adding a plus or minus after the sale prices of each comps is nothing more than reporting the result of the appraiser's qualitative analysis that the comp compares either more or less favorably to the subject proeprty as the result of differences in some proeprty attribute(s). Apparently you view that as adjusting the comps, but I don't view it that way.

Sounds like you don't think qualitative adjustments are even a thing.

IMO rules written for unethical appraisers don’t really impact unethical appraisers unless there are effective enforcement mechanisms, of which there aren’t many. Instead, they only make the ethical appraiser’s job more difficult by creating more bureaucracy for the sake of compliance. This makes it harder for competent and ethical appraisers to compete in the marketplace against incompetent and unethical appraisers.

Meanwhile, there are parts of the process that are improved by discretion obtained via experience, and taking that away from good appraisers in favor of purely data-centric practices will turn us into worse versions of AVMs. There are some things for which there is little or no evidence to support a credible adjustment that are better left dealt with using experience and logic rather than by drumming up questionable support solely for the purposes of being compliant.

 

[timd354]

The years are experience are not a "mere fact" that prior work was performed. The years of experience for an appraiser are like the years of experience for any other profession - it adds tremendous value BECAUSE the years out in the field seeing so many different homes and areas walking properly, comparing in person the levels of quality of construction and upgrades. talking to market partitions and builders at inspections, and driving the neighborhood to inform the appraiser's judgments and analysis.

I would assume that feedback from appraisers themselves wrt hybrid should be part of the data considered -there is no way for an appraiser to know, and therefore for you or any reviewer to know, if the appraiser's value would have been different had their personally inspected.

Experience by itself adds no value or credibility to any profession as there are plenty of idiots in every profession (appraisers included) who do things incorrectly/incompentently for years and years with the years of experience doing nothing more than reinforcing their use of incorrect methodology and their incompetence.

By the way, USPAP does not preclude an appraiser from applying their experience and the things they have learned from doing past appraisals in the same market. In fact, appraisers should apply their experience, however just citing their experience as support for their opinions with nothing more to support those opinions is simply not sufficient and more often is just a sign of laziness and demonstrates that they did not do the required analysis necessary for a credible result.

 

[J Grant]

A desktop seemd d ip

Experience by itself adds no value or credibility to any profession as there are plenty of idiots in every profession (appraisers included) who do things incorrectly/incompentently for years and years with the years of experience doing nothing more than reinforcing their use of incorrect methodology and their incompetence.

By the way, USPAP does not preclude an appraiser from applying their experience and the things they have learned from doing past appraisals in the same market. In fact, appraisers should apply their experience, however just citing their experience as support for their opinions with nothing more to support those opinions is simply not sufficient and more often is just a sign of laziness and demonstrates that they did not do the required analysis necessary for a credible result.

The mistake for GSE work is appraisers ONLY referencing their experience as to why they did not make X adjustment - all they needed to do is say the adjustment was based on X , and the applied adjustments narrow the adjusted range, etc. One would hope market field experience would lead to better comp choices and adjustments of course .

BTW, I never write "in my experience" on a report. I reference and imply the experience through other narrative means ( gave a few examples earlier in this thread )

 

[George Hatch]

USPAP does not require an appraiser to "prove" the amount of an adjustment or the lack of an adjustment....

What USPAP requires of appraisers is to meet the requirements of the assignment, which can vary significantly by user.

Fannie's policies set forth the additional Fannie-driven requirements for the appraisals they use. Including how they use an SC grid or a CA.

 

[timd354]

Sounds like you don't think qualitative adjustments are even a thing.

IMO rules written for unethical appraisers don’t really impact unethical appraisers unless there are effective enforcement mechanisms, of which there aren’t many. Instead, they only make the ethical appraiser’s job more difficult by creating more bureaucracy for the sake of compliance. This makes it harder for competent and ethical appraisers to compete in the marketplace against incompetent and unethical appraisers.

Meanwhile, there are parts of the process that are improved by discretion obtained via experience, and taking that away from good appraisers in favor of purely data-centric practices will turn us into worse versions of AVMs. There are some things for which there is little or no evidence to support a credible adjustment that are better left dealt with using experience and logic rather than by drumming up questionable support solely for the purposes of being compliant.

Correct, I don't think there is any such thing as a qualitative adjsutment to a comparable sale price. However, that does not mean that I do not believe that qualitative analysis is not important and valid or should not be applied in the appraisal process. Also, I will freely admit that sometimes the support for a quantitative adjsutment to a comparable sale is based in whole or in part on qualitative analysis, however, an adjsutment made to a comparable sale price (whether expressed as a dolar amoutn of a percentage of the sale price) is, by definition, a quatitative adjustment to that sale price.

In your previously provided example that you assert is a qualitativfe adjsusmtent, simply adding a plus or a minus after the comparable sale price (i.e. $320,000+) is not an actual adjustment of the sale price in my view. Either way, the sale price is still $320,000 and all that adding the + or - after the sale price indicates is that the appraiser views some attribute of that comparable sale as being inferior or superior compared to the subject property. In other words, you are not actually adjsuting the sale price when you do this, you are simply grouping the subject proeprty and comparable sales into different categories.

If you look in the index of the Appriasal Institute's The Appraisal of Real Estate, there is a reaosn that you will find refences listed for quantitative adjustments, but no reference for qualitative adjustments (becuase they don't exist). However, you will find a reference for qualiative analysis.

This also why is you look up the term "qualitative adjustment" in the The Dictionary or Real Estate Appraisal you will find that the dictionary states that the use of this term is a "misnomer" precisely because an adjustment is not made:

 

[Joe Flacco]

That would be perfectly acceptable if you are reporting the appraisal in a narrative report or using a non-GSE form, but if you are using the GSE form, you are signing a cert that say you did make adjsutments (now it is possible that all of the adjsutments could be zero if you had 3 very similar comps), sio if you are not doing that, then you are signing a certification that is false, which most state boards would probably find is a USPAP violation.

Hey, I am not saying that I like or agree with the all of the pre-printed certifications on the GSE appraisal forms, I am just reporting the what is there and what you are certifying that you did everytime you sign an appraisal report that uses one of those forms.

FYI, I suspect that some appraisers are not at all cognizant of what is actually in the certification that they are signing.

Can you share one of your URARs from back in the day that is USPAP compliant based on your interpretations of the certs?

I would love to see it.