What makes an appraisal complex?

[Webbed Feet]

Yeah, but we don't have to change our mascots every few years trying to fix our image either. So how is Dufus anyway?

 

[George Hatch]

The federal banking regs apply to lenders, not appraisers. That's why those regs hold the lenders accountable for their decisions.


The Scope of Practice for appraisal licensees is dictated by the states, which are compelled by federal law to adhere to the AQB criteria for Certified levels of licensure, but not to the Trainee Appraiser and Licensed Real Property Appraiser classifications. Some states adhere to the AQB criteria for these other two levels of licensure and some states don't. Some states don't even offer one or both of these other levels of licensure.

The Appraisal Qualifications Board's "Real Property Appraiser Qualification Criteria" says the following about the scope of practice for the State Licensed Real Property level:

A. The Licensed Residential Real Property Appraiser Classification applies to the appraisal of non-complex one to four residential units having a transaction value less than $1,000,000 and complex one to four residential units having a transaction value less than $250,000.

B. Complex one- to four-family residential property appraisal means one in which the property to be appraised, the form of ownership, or the market conditions are atypical.

C. For non-federally related transaction appraisals, transaction value shall mean market value.

1. The classification includes the appraisal of vacant or unimproved land that is utilized for one to four family purposes or for which the highest and best use is for one to four family purposes.

2. The classification does not include the appraisal of subdivisions for which a development analysis/ appraisal is necessary.

Sooo, the term "complex" is used in a licensing context for appraisers and does apply to those licensees with such restrictions.

As for "atypical market conditions", I would think that would come under the category of unusual. Examples of an atypical market condition would include a specific neighborhood (or market segment) that has been increasing in value even though other seemingly comparable neighborhoods have been decreasing. Perhaps an area where the lenders decided to stop lending, or where the market conditions had turned volatile as a result of the closing of a major local employer. Even a vacation home market could be considered atypical because the typical buyer wasn't buying a primary residence.


A lot of appraisers mistake competency for licensing restrictions on these types of assignments. A state licensed appraiser may be very experienced and quite comfortable with their competency in one of these situations and still be outside the scope of practice for their license. Having the certification doesn't mean the appraiser is actually smarter; it just means they have demonstrated to the state's satisfaction that they have the minimum requirements for that level of licensure.

 

[Couch Potato]

The bottom line is a Licensed appraiser will never need prove a property appraisal was complex. What they will need to show to demonstrate they were within the scope of their license is that the appraisal was non-complex. It is the definition of that term which is important. Proving the absence of complexity is the standard.

 

[Mike Garrett RAA]

I find this to complex to understand. I gage it this way...if the hair stands up on the back your neck when you read the assignment letter...it's probably complex.

And, while we are at it...what is the transaction value? As an example, can a licensed appraiser appraise a residence for $10,000,000 if the loan was only $750,000? Inquiring minds want to know.

 

[timd354]

I find this to complex to understand. I gage it this way...if the hair stands up on the back your neck when you read the assignment letter...it's probably complex.

And, while we are at it...what is the transaction value? As an example, can a licensed appraiser appraise a residence for $10,000,000 if the loan was only $750,000? Inquiring minds want to know.

Mike, the answer to your question in Maryland, DC and Virginia is yes, a licensed appraiser can appraise a property with a $10 million value as long as the loan amount and the sales price (in the case of a purchase transaction) is less than $1 million. In these jurisdictions, transaction value, not market value governs the level of licensure required.

 

[Joyce Potts]

If you can't decide which form to use, it's probably complex.

 

[Michigan CG]

A complex assignment is one where you have never done that type of property before and where you have no idea where to gain the competency. You can do the assignment as long as you become competent if it is possible.

A complex assignment is a dilemma for all license levels. What is complex for me might be very easy for others and vice-versa. Different appraisers have different competencies because of past experience and assignments.

Complex assignments include geographic competency, subject type, economic situations, available information and many other factors.

When in doubt you have to decide if you can become competent or if you need to turn the assignment down.

 

[George Hatch]

I disagree that complexity and competency are that arbitrarily associated.

If a trainee went to work in a shop that did nothing except co-op units (or any other oddball specialty) they'd soon become competent within that niche. That competency wouldn't make them qualified to appraise one of those properties without supervision, though, because of the scope of practice limitations on their license.

My point is that there are a lot of state licensed appraisers who are very competent to perform a good percentage of the complex assignments, however their personal competency doesn't change the complex nature of those assignments or the limitations on their licenses.

 

[Webbed Feet]

Bonk !

A complex assignment is one where you have never done that type of property before and where you have no idea where to gain the competency. You can do the assignment as long as you become competent if it is possible.

A complex assignment is a dilemma for all license levels. What is complex for me might be very easy for others and vice-versa. Different appraisers have different competencies because of past experience and assignments.

Complex assignments include geographic competency, subject type, economic situations, available information and many other factors.

When in doubt you have to decide if you can become competent or if you need to turn the assignment down.

Mr. Evans,

With respect, I bonk you for that post! m2:

Mr. Hatch is nailing the topic. Scroll up to the link from my board's publication on this.. "Complexity" is a licensing / certification issue..! NOT a competency issue... All real estate appraisals have competency considerations. It is exactly as Mr. Hatch said.

 

[jay trotta]

A quick question for the "Originator" of the post;

was your inquiry based on a Quiz by the "Chief Appraiser" from LSI ???? letter of 08/08 - where it states;
"Please be advised that we will begin to require Documentation as to why Fee's need to be adjusted and we will continue to monitor these assignments for proof of "complexity" after delivery. As before, we will not adjust fees for complexity that have not been previously approved. Moving forward, if the reasons are not bourne out by the appraisal itself, or are found to be false and conflicting with the reasons/documentation given, LSI will take the appropriate actions".

I in particular was drawn to; "if the reasons are not bourne out by the appraisal itself"

It appears "complexity" is being taken to various levels....hmmmmm