What is this? "HB 2533 - appraiser is not required to comply with USPAP effective June 15, 2021".

[Mejappz]

I would say that eventually the majority of evaluations are going to be done as a fill-in – side hustle for realtor's teenage kids and underpaid/unqualified bank personnel. The fact that at least 75% of all appraisal work will be going this way soon does not bode well for the future. Fortunately the future does look bright for qualified appraisers advertising their services to those who will soon be harmed by this complete abdication of fiduciary responsibility.

They already are.

 

[DWiley]

Once $50 "evaluations" get their nose under the tent nobody will even remember what an "appraisal" is supposed to look like.

That is certainly not what has happened in TN, where appraisers (and others) have being doing evaluations for over 25 years. Still plenty of appraisal work

 

[norapp]

Having just completed USPAP course again for the 12th time (SNOOZE), nothing ever changes except the language in the rules. The main thing I always take away is that any time an appraiser offers an opinion of value they are bound by USPAP. I don't see how a state law would supersede this and I for one would not ignore USPAP.

 

[Sid Holderly]

Indiana did this in 2016. Indiana became the third state to allow state-licensed and state-certified appraisers to perform evaluations without having to comply with the Uniform Standards of Professional Appraisal Practice when Gov. Mike Pence signed SB 300 into law March 21, 2016. For a few years Real Estate Brokers had to follow USPAP and they complained. Their lobby is much larger.

I rarely do evaluations though and have more full appraisal work to do than I can get done.

 

[George Hatch]

Having just completed USPAP course again for the 12th time (SNOOZE), nothing ever changes except the language in the rules. The main thing I always take away is that any time an appraiser offers an opinion of value they are bound by USPAP. I don't see how a state law would supersede this and I for one would not ignore USPAP.

It's actually the other way around - the requirements of USPAP include adherence to the law. In the event of a conflict the USPAP requirement that conflicts is always subordinate to the law. That's what the JURISDICTONAL EXCEPTION RULE is for - to retain all the other requirements for the assignment + adherence to the law where the one or more sections of USPAP conflicts.

Here's an example: lets say a state or federal law or regulation or judicial order prohibited the analysis, consideration and disclosure of the subject's prior sale or listing history in an appraisal. USPAP SR1-5 normally requires the analysis and SR2-2.x.3 normally requires the disclosure of such activity within 3 years of the effective date - that conflicts with the established law.

The appraiser is not stuck between a rock (the law, rule, regulation) and a hard place (USPAP requirements) because the JE applies and gives the appraiser an automatic exit from the perceived conflict. The appraiser has no discretion on the matter, so it can't even be considered discretionary or an opt-in on their part. They are REQUIRED to adhere to the law and to not develop or report that sales history analysis for those assignments so affected by that law. We don't "choose" to comply with the law instead of SR1-5, we are required to do so.

The appraiser's solution is to comply with the law and refrain from analyzing or disclosing the prior sale in the appraisal and appraisal report in tat assignment. The JE severs the USPAP SR1-5 and 2-2.x.3 requirements for that assignment without touching any of the other requirements in USPAP, the end result being an appraisal report which meets all the *applicable* requirements for that assignment in compliance with both the law and USPAP.
--------------------

Now to your point, appraisers can always CHOOSE to adhere to USPAP in an appraisal assignment, but under normal circumstances the applicability of USPAP is otherwise normally triggered by a requirement in either the law and/or by agreement with the client or users. So if govt deems certain "value opinion rendered on an impartial basis" assignments to be Not-an-Appraisal then USPAP would not be applicable to those assignments insofar as far as the govt is concerned. That wouldn't necessarily prevent an appraiser from opting into the various requirements of USPAP anyway, but they wouldn't be required to do so.

Another way would be if the user drove compliance of certain elements of USPAP which were not already included in the requirements for an Eval.

 

[DWiley]

Having just completed USPAP course again for the 12th time (SNOOZE), nothing ever changes except the language in the rules. The main thing I always take away is that any time an appraiser offers an opinion of value they are bound by USPAP. I don't see how a state law would supersede this and I for one would not ignore USPAP.

In any of those 12 occasions did you happen to read/review the PREAMBLE? Lines 35 - 39

"USPAP does not establish who or which assignments must comply .... An appraiser must comply when either the service or the appraiser is required by law, regulation, or agreement with the client ..."

USPAP does not trump law; USPAP gains authority via adoption or recognition by law. Conversely, law can also say USPAP compliance is not required in certain circumstances.

 

[J Grant]

I have never done an evaluation and have no idea what one looks like . Is it an opinion of value, or an opinion of price ? And if it is an opinion of value, is a market value definition used ?

Also, why can't an evaluation also comply with USPAP ? I see USPAP as having a lot of latitude within its standards, with only a few requirements that would be a violation to ignore, such as disclose a prior sale or a prior service. Why would an appraiser have a harder time doing a USPAP compliant evaluation vs a non USPAP compliant evaluation? If an appraiser offers an opinion of value as an appraiser, then it is an appraisal no matter what other label is put on it, such as evaluation.... at least that is how I understand it.

 

[djd09]

maybe they do not like the SOW rule. yeah either do i

 

[George Hatch]

IMO a lot of appraisers look at USPAP as being an impediment to what they want to do and interpret the requirements as being capricious, arbitrary and punitive.

I disagree. I think of each requirement in utilitarian terms. I think each requirement fills a hole which would otherwise exist if there were no such requirement.

For example: people might think the requirement to analyze HBU in a MV appraisal is unnecessary and arbitrary in nature. That opinion will most commonly be found among appraisers whose book of work consists almost exclusively of properties which are already at their HBU. So far so good, because for those assignments the conclusions are almost always going to be the same: what you see is what you get. But that isn't the outcome ALL the time and it certainly isn't as universal an outcome for all different property types that appraisers appraise. So it's one of those things where blowing the requirement off wouldn't cause a problem until it did cause a problem, at which point that problem will be serious WRT the outcome of the appraisal.

The point being that regardless of how arbitrary the requirement might seem to some, there is some utility in actually KNOWING what the typical buyers are going to do with a property, how they're looking at it, and which attributes are the dominant considerations. This will affect which units of comparisons they use to analyze, which alternative comparables to consider and so on.

We can go all down the list of the other requirements and apply the same reasoning. Each requirement has utility and if an appraiser is getting around at all WRT the different appraisal problems they run into, each requirement will eventually come into play to affect their process and decision making. None of these requirements are in place for no reason.

Which brings us down to why I think an appraiser should choose to adhere to each of these minimums even when not required to do so in an assignment involving an appraisal-by-another-name. Adherence benefits your users but it also benefits your own position.
.

 

[norapp]

It's actually the other way around - the requirements of USPAP include adherence to the law. In the event of a conflict the USPAP requirement that conflicts is always subordinate to the law. That's what the JURISDICTONAL EXCEPTION RULE is for - to retain all the other requirements for the assignment + adherence to the law where the one or more sections of USPAP conflicts.

Here's an example: lets say a state or federal law or regulation or judicial order prohibited the analysis, consideration and disclosure of the subject's prior sale or listing history in an appraisal. USPAP SR1-5 normally requires the analysis and SR2-2.x.3 normally requires the disclosure of such activity within 3 years of the effective date - that conflicts with the established law.

The appraiser is not stuck between a rock (the law, rule, regulation) and a hard place (USPAP requirements) because the JE applies and gives the appraiser an automatic exit from the perceived conflict. The appraiser has no discretion on the matter, so it can't even be considered discretionary or an opt-in on their part. They are REQUIRED to adhere to the law and to not develop or report that sales history analysis for those assignments so affected by that law. We don't "choose" to comply with the law instead of SR1-5, we are required to do so.

The appraiser's solution is to comply with the law and refrain from analyzing or disclosing the prior sale in the appraisal and appraisal report in tat assignment. The JE severs the USPAP SR1-5 and 2-2.x.3 requirements for that assignment without touching any of the other requirements in USPAP, the end result being an appraisal report which meets all the *applicable* requirements for that assignment in compliance with both the law and USPAP.
--------------------

Now to your point, appraisers can always CHOOSE to adhere to USPAP in an appraisal assignment, but under normal circumstances the applicability of USPAP is otherwise normally triggered by a requirement in either the law and/or by agreement with the client or users. So if govt deems certain "value opinion rendered on an impartial basis" assignments to be Not-an-Appraisal then USPAP would not be applicable to those assignments insofar as far as the govt is concerned. That wouldn't necessarily prevent an appraiser from opting into the various requirements of USPAP anyway, but they wouldn't be required to do so.

Another way would be if the user drove compliance of certain elements of USPAP which were not already included in the requirements for an Eval.

You are right. There is an exception. I wish they would narrow down the 28 hours of mind numbing stuff so I might actually retain something other than comply with USPAP. I believe I interpreted that section way to narrowly.