Appraiser Ethics

Appraiser Ethics

An appraiser has a responsibility to the public to perform an accurate appraisal. In some circumstances their assessments may be relied upon by the public or one or more entities. They must protect the confidentiality of their clients and adhere to strict regulations. It is their obligation to provide accurate information with an appropriate degree of competency and maintain professional conduct. Appraisers may often engage in trades where they have specific knowledge to bring to an assignment. It is their duty to use their understanding for the benefit of reporting accurate data that will facilitate the decision process of pending issues. An appraiser may frequently enter into agreements with parties that state specific guidelines that must be met. The appraiser has a responsibility to read and understand the agreement to ensure it maintains integrity and fairness prior to entering into it.

The Uniform Standards of Professional Appraisal Practice

The Uniform Standards of Professional Appraisal Practice (USPAP) is a standard authored by the Appraisal Standards Board (ASB). The ASB is one of two divisions of the Appraisal Foundation (TAF). Periodic revisions are made to the USPAP to address current issues. The standard is comprised of four rules and ten standards. The ethics rule addresses conduct and prohibits specific activities including certain undertakings to procure assignments. It also establishes requirements for performing appraisal assignments and reporting results. The competency rule requires the appraiser to assess his proficiency for performing an assignment. Three steps for accomplishing credible appraisals are established in the scope of work rule. Requirements set forth in the USPAP that contradict law are nullified in the judicial exception rule.

The standards set criteria for the act of performing an appraisal. The USPAP distinguishes the activities performed in the appraisal process from the written document in which it refers to as a report. The standards encompass various disciplines including appraisal and reporting of real property, personal property, business property and intangible assets. The ten standards do not provide specific procedures or methods to follow but rather require the application of practices recognized by the industry to produce reliable results. Those standards that address appraisal reports state that results must be reported in a way that is not deceptive and establish requirements applicable to each discipline.

The Appraisal Institute Code of Conduct

The Appraisal Institute Code of Conduct governs the ethical and competent practices of appraisers in the real estate industry. All Appraisal Institute members must comply with the code of conduct. It consists of principles, rules and explanatory comments established by the Appraisal Institute to inspire the public’s confidence in its members. The code of conduct delineates the requirements for appraisal, appraisal review and consulting service. The criterion exceeds that of the state certified and licensed real estate appraisers. Members who do not comply with the code of conduct are disposed to disciplinary or remedial action. Members of the Appraisal Institute are also responsible for ensuring other members understand and comply with the code of conduct. They are required to report violations to the Director of Ethics and serve on the review board to examine possible violations.

Ethical Practices and Procedures

The establishment of ethical practices and procedures identifies standards that consistently deliver service that benefits the public and society. It establishes rules for conduct to prevent criminal charges resulting from dishonesty or fraud. Ethical practices protect the client’s privacy. They ensure that appraisers are qualified to make assessments prior to performing an assignment and notify clients of any deficiencies in competence. Methods of reporting are established that avert biased data and provide reliable information. Appraisers are prohibited from communicating, contributing to or participating in the preparation or delivery of a report containing misleading figures.

Why You Want to Choose an Ethical Appraiser

Choosing an ethical appraiser protects your financial well-being. It ensures that your property is valued with methods commonly recognized in the industry to provide consistent information. Valuations performed by ethical appraisers provide fairness in tax assessments and mitigate fraudulent lending practices. They also support accurate and impartial claims for insurance and estate claims. An ethical appraiser will protect confidential information. They provide full disclosure of all information relevant to the appraisal to allow you to make informed financial decisions.

How to Choose a Real Estate Appraiser

If you are selecting an appraiser, you should ask questions in order to make the best possible decision. You should consider the following criteria when selecting a qualified real estate professional, and don’t be afraid to ask questions.

1) Personal Referral

Image1Asking a trusted friend or colleague can be the best way to hire a professional in any given field but especially in this case. Always use this as your first step. If you don’t know anyone who has a good reference, look for a professional appraisal organization, and they will refer you to candidates in your area.

2) Licensed or Certified in Your State

Check the appraiser’s license level. Certification requires additional education and experience. Confirm their response by searching the Appraisal Subcommittee National Registry, using their name, license number, or location.

3) Hold a Designation

Ask if the candidate holds an additional designation that must be earned through additional education, which would thereby increase his or her credentials.

4) Experienced and Competent

Make sure they are experienced and competent in your community and with your property type. Question their knowledge of your area and whether or not their experience includes condos, single-family residences, custom homes, land, or any other applicable type. Use the word “competent” since appraisers are required, by the industry’s standards, to refuse an assignment if they are not competent to appraise it.

5) Recent Appraisals of Similar Properties

Market situations change quickly, so make sure the professional you are interviewing has completed evaluations recently in the area of the subject property.

6) Consider Fee and Time Frame

Even though obtaining the lowest price and getting the job done more quickly are often top priorities, qualifications of the professional should be at the top of the list.

7) Copy of Resume and References

Since your selection process is quite similar to a job interview; you will not be overstepping your bounds if you ask for a copy of their resume and references. If they are a seasoned, qualified professional, they should already have these prepared and be happy to provide them for you.

Before selecting an appraiser, you should cover all of your bases by doing your homework. You can then be confident you will receive a well-supported, compliant, and credible report.

Uniform Standards of Professional Appraisal Practice (USPAP) 2014-2015

USPAPI recently joined the Real Estate Appraisers Association (REAA) and attended my first Continuing Education course with them on the updated Uniform Standards of Professional Appraisal Practice for 2014-2015. Uniform Standards of Professional Appraisal Practice (USPAP) represents the generally accepted and recognized standards of appraisal practice in the United States. The course instructor was Ken Hunsinger who made the course both educational and enjoyable. Thanks Ken.  I have to say it is always great to meet with other Appraisers for discussion.  I always seem to learn something new.

Many of the revisions were edits made for clarification and do not establish new requirements. There were revisions made to the report options of STANDARDS 2,8, and 10 for written report options. Previously there were three options, Self-Contained Appraisal Report, Summary Appraisal Report, and Restricted Use Appraisal Report. In most lending cases the Summary Appraisal report was used. As of January 1, 2014 there are only two written report options, Appraisal Report and Restricted Appraisal Report. A Restricted Appraisal Report does not require as much reporting as an Appraisal Report. In addition, Effective January 1, 2014, the Standards for Appraisal Consulting, STANDARDS 4 and 5 were retired. 



Commonly Asked Questions

How long will the appraisal inspection take?
The appraisal inspection usually takes about 30-60 minutes, depending on the size of the property.
What will the appraisal do when he comes out?
full inspectionThe appraiser will do the following:

  • measure the square footage of the dwelling(s)
  • take photos of the exterior
  • take photos the interior including each room
  • take photos of upgrades
  • take photos of deferred maintenance (if present)
  • take photos of furnace, central air, detectors, etc.

If your property has a FHA loan the appraiser will also check the following:

  • utilities – power, water, and gas
  • attic
  • crawl space
Does my house need to be clean?
No, when the appraiser comes out he is looking at the condition of your house, not what’s in it.
How long will it take to complete the report and send it to my lender?
Typically it will take three to five days to complete the analysis and develop the report before it can be sent to the image
So what do you think my house is worth?

The appraiser will no be able to discuss the value with you because the lender is their client. By talking to you about the value, he/she would breach the confidentiality. However, the lender is obligated to provide you with a copy of the appraisal report 3 days prior to closing.



Have you noticed someone taking pictures of your house or maybe your neighbors? Many people may be alarmed to find someone taking a picture of their house. What most people don’t know is that it is probably an appraiser. Many appraisers are independent contractors that work for themselves and don’t have a car with their company name displayed on it. They just look like a regular person in front of your house, in a regular car, taking a photo.




When an appraiser does an appraisal, he selects comparable properties to compare with the subject property. This means that he has to find homes in the neighborhood of the property he is appraising that are comparable to it. Most appraisers use properties that have sold within the last year. So if you have bought your home within the last year and someone is taking a photo of it, you can bet it is just an appraiser.


San Jose Market Conditions

Over the past six months, the MLS market indicators below for San Jose appear to show the market is cooling. While the average sale price has slightly decreased, the price per square foot has remained stable. The number of sales  and sale price to list price ratio have declined. In addition, both inventory and days on market have increased.

MLS Market Indicators


avg dom

num listings


The graph below shows REO sales have been fairly constant throughout the year. While short sales are down from a year ago, they are on the rise over the past five months.


Practical Regression Using Microsoft Excel

regression graphLast week I took the Appraisal Institutes course “Practical Regression Using Microsoft Excel”. This has been a hot topic in the appraisal industry and there were many appraisers attending the course, even from out of state. The instructor was John Urubek MAI and he was very knowledgeable and had many practical examples which made the course quite interesting. I found the course to be extremely useful. He had many examples of using regression on small data sets which appraisers deal with on a daily basis. It was also useful in learning more advanced features of Excel for both statistical analysis and graphing the results. Even though this course has been extremely popular with appraisers, it appears the Appraisal Institute is going to cancel the course. It seems it is concerned that the small data sets do not lend themselves towards using regression. I feel it is just one more tool in the appraiser’s tool box which could be useful in helping to come to a value opinion and I am glad I had a chance to take the course.

Please send me a copy of the appraisal

Please send me a copy of the appraisal when it is completed. I received this request just the other day from a homeowner for a refinance. I get this request on a regular basis from borrowers who are refinancing their homes and agents who are involved in a sales transaction, both seller’s and buyer’s agents. Yes, even seller’s agents. I explain to them that I am unable to send them a copy because they are not my client. However, they can request a copy from the lender. If they are the borrower, I let them know the Lender is obligated to provide them a copy of the appraisal under the Equal Credit Opportunity Act. Most borrowers are understanding, but some get very frustrated and insist I must send them a copy because they have paid for it.frustated cartoon

It is the lender who is my client and I have a responsibility to keep the information confidential with them. The Ethics Rule of the Uniform Standards of Professional Appraisal Practice (USPAP) requires the appraiser to keep the appraisal confidential. The appraiser cannot discuss or distribute the appraisal or his value opinion with anyone other than his client. My client is the party who orders the appraisal, not necessarily the party which pays for the appraisal.

New Trainee Licensed Appraiser

We have a newly licensed Trainee Appraiser at M&C Appraisals. Her name is Erin Sova-Hendrickson and she just received her trainee license. She is looking to work with clients which will allow trainees to sign reports under the supervision of her Certified Residential Appraiser mentor, Mark Sova. Please help support the growth of the industry and help her to the next step of licensure. We will provide you with a quality report and grateful for your support and business.

Condominium or Planned Unit Development (PUD)?

Many times we receive an order for an appraisal which is to be reported on a 1073 (Condominium Form) and it turns out to be a Planned Unit Development(PUD) and should be reported on a 1004. The opposite is true as well. We will receive an order for a property in a PUD to be reported on a 1004, and at closer examination, it is a condominium and should be reported on a 1073. Ordering the wrong form delays the completion of the appraisal report. Worst yet, you receive an appraisal on the incorrect form and further down the process, the appraisal has to be completed on the correct form adding additional delays in the loan process. It is best to correctly identify the type of property to be appraised up front and order it on the correct form. Here are some samples of PUD properties and Condominium properties. Can you identify which is a PUD and which is a Condominium? Press the corresponding link to find out.


Condominium Planned Unit Development (PUD)


Condominium Planned Unit Development (PUD)


Condominium Planned Unit Development (PUD)


Condominium Planned Unit Development (PUD)

Property 1 is a large condominium project, pretty obvious. Property 2 is a detached condominium. Property 3 is an attached condominium. Property 4 is an attached Townhouse (PUD). The point is that you cannot tell by the architecture if the property is a Condominium or PUD. I have found that the best way to confirm the type of property is to look at the title report and see what type of ownership is described in the legal description. If we receive an order and are in doubt of the type of ownership, we request the title report.  Here are a couple of links which describe how to best identify whether the type of ownership is Condominium on not.