CHICAGO (Aug. 18, 2009) – In the wake of reports that some real estate appraisers are performing appraisals despite lacking sufficient knowledge of the local market, the Appraisal Institute today chided those who violate the profession’s ethical or professional standards. The Appraisal Institute is the nation’s largest association of real estate appraisers.
“The Appraisal Institute is very proud of the well-deserved reputation for excellence its members have achieved,” said Appraisal Institute President Jim Amorin, MAI, SRA. “We won’t allow that reputation to be tarnished by appraisers – whether they’re our members or not – who breach ethical or professional standards.”
Since the May 1 implementation of the Home Valuation Code of Conduct, some appraisal management companies have hired appraisers for assignments outside of their geographic regions, where they sometimes lack (and fail to obtain) the knowledge required to perform an accurate appraisal. Some of the resulting appraisal reports have led to complaints by realtors, builders, lenders, brokers, home sellers and buyers.
Appraisers must conform to The Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice (USPAP). The Appraisal Foundation is a not-for-profit organization established by the appraisal profession in the United States.
USPAP’s Competency Rule states: “Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently …”
USPAP further states: “In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.”
“As the nation’s largest and premier real estate appraiser association, the Appraisal Institute takes seriously any instances, no matter how rare, of appraisers violating ethical or professional standards,” Amorin said. “We have reminded our members that violations will not be tolerated. I encourage non-members to join us in speaking out against any appraiser who violates the standards of our profession.”
In addition to USPAP, Appraisal Institute members are required to abide by the organization’s Code of Professional Ethics, which states: “It is unethical to fail to properly identify the issue to be addressed and [to fail to] have the knowledge and experience to complete the service competently prior to agreeing to perform any service …”
“The Appraisal Institute expects and demands its members to strictly adhere to its Code of Professional Ethics,” Amorin said. “We will take disciplinary action against any member who violates our organization’s geographic competency ethics requirement. Non-member appraisers should strive to achieve the same level of ethical behavior.”
More than 26,000 appraisers are members of the Appraisal Institute, which estimates that there were 100,600 appraisers in the United States as of June 30.
Information on the Appraisal Institute Code of Professional Ethics, including complaint processes, enforcement procedures, and enforcement statistics is available at http://www.appraisalinstitute.org/about/ethics.aspx.
The Appraisal Institute is a global membership association of professional real estate appraisers, with 25,000 members and 91 chapters throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Members of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA and SRA designations. For more information regarding the Appraisal Institute, please visit www.appraisalinstitute.org.