As a professional appraiser, you don’t want to have a disciplinary complaint filed against you, and you certainly don’t want to be the subject of a complaint that results in disciplinary action. So, how can you prevent these undesirable consequences? Here are several do’s and don’ts to help you avoid situations that may get you into trouble as a real estate appraiser.
Do familiarize yourself with your state’s appraisal laws and rules/regulations
As an appraiser, you want to make sure that you’re following USPAP, but you also want to make sure that you familiarize yourself with your state’s rules and regulations. Don’t think that following USPAP alone will keep you out of trouble. There is a misconception that some appraisers subscribe to: “If I just follow USPAP, that’s all I have to worry about.” In truth, USPAP is merely a set of minimum standards. There may be additional standards to which you must comply.
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Do maintain a complete and well-organized workfile
Be sure to maintain a complete and well-organized workfile for all appraisal and appraisal review assignments. I cannot overstate the importance of a workfile. A good workfile can save your metaphorical skin somewhere down the road if you have a complaint filed against you. Imagine if you don’t have a good workfile, and a complaint is filed, and you retrieve the workfile and take a look at it and think, “What was I doing when I did this appraisal? What could I have been thinking?”
There should be enough information in your workfile so that you know exactly what you were thinking when you developed and reported that opinion of value.
Do complete every appraisal as if it will be reviewed by a state investigator
In an appraisal assignment or appraisal review assignment, the temptation is there to cut corners in the workfile. This is especially true because as an appraiser you are pulled in many different directions at once, you’re busy, and sometimes you get clients who don’t want to pay you a lot of money. You might think, “I’m not even going to bother documenting this, if I have to I’ll come back later and fill in the blanks here, I can always add that to the workfile later.”
That is a very dangerous way of thinking. You don’t want to have that attitude regarding the workfile. Such an attitude is a recipe for disaster because, in many cases, complaints are filed years after the appraisal is completed and transmitted to the client. It’s really difficult to append or re-create a workfile 3–5 years later. Most importantly, it is a violation of USPAP to create a workfile after the fact; the workfile must be in existence at the time that the report is transmitted to the client.
To avoid disciplinary action, keep a clean workfile, do a thorough report, and always think that somebody from the state could end up looking at the report and the workfile.
Don’t revise the value in a previously completed appraisal report without a really good reason
You need to have a good, solid, documented reason if you’re going to change a value opinion after the fact. Changing the appraised value simply for the purpose of meeting the contract sales price is not a good reason. Such an act might appear to make everybody happy, e.g., the lender/client gets to make a loan, the real estate agent gets a commission, the buyers get the house, etc. However, when the state appraisal regulatory agency looks at the file, they’re going to have a different reaction. And it’s not going to be good.
Don’t sign a consent agreement without engaging an attorney
I’m not saying you should never sign a consent agreement. There are times when you may be best served by signing such an agreement. However, I would always recommend engaging an attorney to negotiate the agreement on your behalf. Before you sign anything, your attorney needs to make sure that the terms of the agreement are consistent with your best interests.
You don’t want to get into a situation where you are thinking, “If I just sign this agreement the whole thing goes away, and this is the most expedient way to take care of this matter,” but you don’t know the exact ramifications of what you’re signing, then you end up with a disciplinary record that causes you problems down the road.
My point is: Don’t negotiate a consent agreement yourself or sign a consent agreement without having it reviewed and explained to you by your attorney.
Do strictly adhere to the ETHICS RULE and COMPETENCY RULE
ETHICS RULE violations and COMPETENCY RULE violations are considered the most severe violations, and they receive the most significant sanctions. Minor violations of these USPAP rules may get you a formal reprimand, corrective education, a short suspension, and/or a medium period of probation or monitoring. Major violations could lead to revocation or voluntary surrender in lieu of disciplinary action (i.e., forced resignation) with or without a large fine, and payment of restitution and/or costs. As an appraiser, you would do well to familiarize yourself with these rules and faithfully abide by them.
For more do’s and don’ts, and a wealth of other insights on how to avoid appraisal complaints and disciplinary action, enroll in my top-rated CE course: That’s a Violation. To learn more about what happens if you do end up getting a complaint filed against you, read my article: How Are Appraisal Complaints Enforced?
Editor’s note: This blog post was originally posted on December 18, 2018. It has been updated slightly.
Written by Dan Bradley. Daniel A. Bradley, SRA, CDEI is the Director of Online Appraisal Curriculum for McKissock Learning. He has been a practicing real property appraiser since 1987, and has been instructing and authoring appraisal courses since 1992. He is a state certified general appraiser in Pennsylvania and is currently on the FHA appraiser roster. From 2004 to 2013, Dan was a member of the Pennsylvania State Board of Certified Real Estate Appraisers, serving for five years as vice-chairman and three years as chairman. He has also has served as a contracted expert witness appraisal reviewer for the Pennsylvania Department of State.