As many in the appraisal industry know The Appraisal Standards Board (ASB) has officially released the Third Exposure Draft of proposed changes to USPAP. There are several major revisions that could drastically change how you preform your appraisals. If you haven’t seen it yet you can view the document HERE. One of the major concerns to many appraisers is in reference to the requirement for draft reports. Sam Blackburn of the Kentucky Real Estate Appraisers Board (KREAB) has written a letter to the ASB and your support will be helpful as well. Below is his letter to the board.
November 26, 2014
Appraisal Standards Board
Re: Draft Reports
For your consideration
The Appraisal Standards Board (ASB) has done a good job over the past few years in simplifying the Uniform Standards whereby an appraiser and a regulatory board can read the Uniform Standards and both arrive at the same definitive answer. Eliminating Standards 4 & 5 and self-contained appraisal reports clearly shows the ASB was paying attention to appraisers, regulatory boards and users of appraisal services. The ASB’s consideration to eliminate the Statements is commendable.
However, the ASB’s contention that appraisers need draft reports to function in the marketplace is one concept that needs to be put to bed. Draft reports for residential appraisals are not needed and will present a regulatory nightmare for state Regulatory Boards. Commercial clients may have a legitimate reason to know in advance items such as zoning, highest and best use, rents, leases and available comparable sales, etc.
Ninety-nine percent of requests for draft reports from residential clients, involving a mortgage, are requested to ascertain the estimate of value in advance. Should the draft report indicate an estimate of value too low, the client has ample time to pressure the appraiser to increase the estimate of value. This is exactly the type of conduct Title XI and the Dodd-Frank Act is trying to eliminate. This should also by the goal of the ASB.
If the ASB is dead set on allowing draft reports, by all means do so, but with the following provision: No draft report shall contain the appraiser’s estimate of value and any reference to value can only be stated in the final report. This provision will end requests for residential draft reports and still allow commercial clients to request draft reports for legitimate purposes.
The ASB’s contention that an appraisal report is not complete unless it contains a signed certification is a red herring at best. Should this proposal be approved, it will ensure we will always have draft reports. This proposal is merely a back door approach to draft reports and should be seen for what it is.
To ensure an appraiser’s objectivity and independence, the ASB should either eliminate draft reports or consider my suggestion whereby only the final report can contain the appraiser’s estimate of value. The ASB is doing a great job. Keep up the good work.
Let us know what you think in the comments below or submit your comments on this directly to the ASB at firstname.lastname@example.org.