Qualified Real Estate Appraisal Reviewers

 By James R. MacCrate, MAI, CRE, ASA

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.[1] 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.

[1] 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.


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About Jim MacCrate

Real estate appraiser and valuation consultant for more than 30 years specializing in reviewing real estate appraisals, risk management and quality control.
This entry was posted in Appraisal Reviews, Ethics, Real Estate Litigation Support, Uniform Standards of Professional Appraisal Practice and tagged , , , , , , . Bookmark the permalink.

5 Responses to Qualified Real Estate Appraisal Reviewers

  1. cecil m simon says:

    Jim:

    I have been around about twenty five years. You are designated ASA, I have to assume you got that by reciprocity. Can you tell me when was the last time the courses listed as 201-205 by the American Society of Appraisers were taught anywhere in America? I ask this because you mentioned this organization as one that has strict education and experience requirements. If you have the info send it to my e-mail.

    • jmaccrate says:

      I have been in the ASA for a long time and took the courses back in the 1970’s.

      I would suggest that you contact the ASA directly for membership information and their current requirements. I often work jointly on engagements with other members in the ASA.

      The web site located at http://www.appraisers.org/ASAHome.aspx.

      Jim MacCrate

  2. Your list of 12 is spot-on. I think most people have a difficult time ascertaining the level of skill and experience an appraiser possesses – how many opportunities does an individual have to hire an appraiser? How many times does a business entity hire a review appraiser? Where do they start to assess the *actual* qualifications of the candidate? From the appraiser’s own web site? Involvement (association membership) that may be less substantive than it appears? Haven’t we seen recent debate about the (real or perceived) dilution of the value of designations, which means those folks that have had them for a long time may not be receiving as much differential credit as they should as compared to more recent recipients?

    Great article!

  3. jmaccrate says:

    Myth: Professional appraisal designations cannot be used when evaluating the qualifications, education and experience of an appraiser.

    Reality: The Fannie Mae Selling Guides state that designations may be helpful in evaluating an appraiser’s qualifications, particularly when the designation is from a nationally recognized organization. Specifically, the Fannie Mae Selling Guide states:
    “Professional appraisal designations can be helpful to the lender in evaluating an appraiser’s qualifications, particularly when the designation is from a nationally recognized organization that has formal experience, education, and ethics requirements that are strongly administered. If the lender considers an appraisal designation in its evaluation, it should be familiar with the appraisal organization’s specific requirements to ensure that the designation is evaluated appropriately.” From the Appraisal Institute.

  4. jmaccrate says:

    Myth: The licensing of an appraiser ensures his or her competency.

    Reality: Licensing does not necessarily ensure the competency of an appraiser. The Fannie Mae and Freddie Mac Selling Guides require lenders to review the appraiser’s education and experience. Specifically, the Fannie Mae Selling Guides state:
    “A lender must not assume—simply based on the fact that an appraiser is state-licensed or state-certified—that the appraiser is qualified and knowledgeable about a market area or is aware of the appropriate market data sources for the area and will be able to obtain access to them. If an appraiser is not knowledgeable about a particular location, is not experienced in appraising a particular type of property, or is not familiar with (or does not have access to) the appropriate data sources, a lender should not give the appraiser assignments in that market area or for that particular type of property.” From the Appraisal Institute.

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