An appraisal reviewer, ideally, is an unbiased, independent professional who passes judgment on another’s appraisal report. He/she is not an advocate and therefore, does not embrace the appraisal’s value estimate nor provide an opinion of value. Yet some who serve in the role as a reviewer may not be qualified to do so. So, how do you find a qualified, ethical reviewer?
Start with Standards
The Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice (“USPAP”) governs the creation of credible appraisal reports. USPAP requires that appraisal reviewers meet certain qualifications for level of education, training and experience. They must be accountable for decisions which are based on the rules of fairness and objectivity. To be competent, the reviewer also must be familiar with the type of property, the subject market, the geographic area and the appropriate analytical methods for determining value for that type of property. Beyond this simple definition of competence, regulations for appraiser qualifications may vary from state to state.
Scrutinize Those Qualifications
In hiring an appraiser or an appraisal reviewer, focus on the following criteria:
1. Appraiser state licensing or certification
2. Additional professional designations
3. Years of experience
4. General reputation of appraiser
5. Appraiser’s level of education
6. Continuing education
7. Likelihood of providing a quality appraisal
8. Likelihood of meeting delivery deadlines
9. Experience in appraising the property type
10. Experience in the local market area
11. Access to the appropriate data sources
12. Good moral character
Verify Subjective Qualifications
The professional organizations, such as the American Society of Appraisers and the Appraisal Institute‘s code of ethics and education and competency standards provide one more level of protection in comparison to state licensing laws which set generally low and minimal standards, and can stand as a proxy for measuring the more subjective qualifications such as reputation and good moral character. Many professional organizations, such as the Appraisal Institute, have developed a sophisticated peer review system through which it enforces their Code of Professional Ethics and Standards of Professional Appraisal Practice. Violations of the code of ethics or standards can result in remedial or disciplinary actions. The professional organizations often have more resources available to discipline members in comparison to the state licensing or certifying agencies. The Appraisal Institute, for one, will tell you if a member has any published disciplinary actions on his or her record.
A Word about Licensing
Licensing sets the minimum standards of appraiser qualifications for the jurisdiction the license covers. In many instances, licensing is inadequate to properly educate real estate appraisers on how to deal with complex real property issues. Unfortunately, many appraisers and reviewers hired by the legal profession do not meet those requirements in New York State. Mandatory licensing in New York State is not required for appraisers and review appraisers. As a result, many appraisers are not prepared or qualified to correctly employ those recognized methods and techniques that are required to produce a credible appraisal or a review appraisal.
A Word about Reputation
Be careful not to confuse reputation with association. Many times clients hire their real estate brokers, friends or acquaintances who are not licensed or designated members of professional real estate appraisal organizations to appraise or review appraisal reports of real property interests. Government agencies often approve appraisers or firms who have made political contributions and do not base their decision on hiring by the qualifications of the individual. Finally, an individual is not necessarily qualified just because that individual works for one the largest real estate companies or accounting firms. Size or reputation of a firm does not mean that an individual is necessarily qualified. It is important to choose an individual, not the firm because of size. It is the qualifications of the individual that is most important.
For additional information, you may want to visit – http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1009583.
Thanks to Noreen Whysel who provided great editorial assistance.
 Jack P. Friedman, MAI, PhD, CPA, and Nicholas Ordway, PhD, JD, “Appraisal Review in a
Litigation Support Role,” The Appraisal Journal (January 2000): 20-31.