April 26, 2013

Contact:

Paula Douglas Seidel

Executive Administrator

The Appraisal Foundation

paula@appraisalfoundation.org

direct phone 202.624.3048

Washington, DC — The Appraisal Foundation (TAF) and its Sponsoring Organizations have formed a national education partnership, the Alliance for Valuation Education (AVE), an organization dedicated to providing greater availability of consistent, quality valuation education. The AVE will be composed of TAF and 11 of its Sponsoring Organizations (Alliance Sponsors).

“Having these organizations work in collaboration with one another has been an evolutionary process based on their input and recommendations. It just makes sense,” stated Steven Elliott, Chair of TAF’s Board of Trustees. “This is an important and long overdue first step in combining our resources for the benefit of the entire valuation profession,” he added. Elliott went on to say, “A common complaint heard from states over recent years is the lack of available quality educational offerings. It is our hope that the Alliance will reduce an education provider’s cost to develop certain courses, thereby allowing them to focus more on delivering courses in underserved areas.”

The AVE is the result of the work of the National Education Partnership Task Force, which was appointed by TAF’s Board of Trustees in May 2012. The Task Force included representatives from several of TAF’s Sponsoring Organizations as well as the Association of Appraiser Regulatory Officials.

The AVE will be:

• established as a new 501(c)3 not-for -profit organization, separate from TAF and its Sponsoring Organizations. The Appraisal Foundation’s Congressionally authorized Boards, the Appraisal Standards Board and the Appraiser Qualifications Board, will not be involved in the governance or operation of the AVE.
• governed by a seven member Board of Regents appointed by the Alliance Sponsors and TAF. One of the Regent positions will be an elected at-large seat, open to the general public.
• composed of TAF and Sponsoring Organizations of TAF in good standing who elect to become a Sponsor of the Alliance. The Appraisal Foundation Sponsors may elect to not join the AVE.
• a developer of educational materials, but not a presenter of the education. The AVE will be a wholesaler rather than a retailer, using a model similar to what TAF currently utilizes with the National USPAP Courses.
• providing the education materials to all educational providers. 

The initial focus will be real property continuing education, with topics possibly drawn from Valuation Advisories issued by the Appraisal Practices Board. The education developed by the AVE will be voluntary; any educational provider will be able to continue to develop similar education and appraisers would not be required to take AVE education.

In the future, the AVE may give consideration to developing other valuation discipline education, including both personal property and business valuation, basic qualifying education for real property appraisers (e.g.Basic Appraisal Principles and Basic Appraisal Procedures) and remedial real property education.   

The appointed members of the Board of Regents will be selected by the Alliance Sponsors and the TAF Board of Trustees at their upcoming meetings in May in Savannah, Georgia. The organizational meeting of the AVE Board of Regents will occur this summer and it is anticipated that the first AVE course could be available in the first quarter of 2014. 

The Board of Trustees of TAF would like to recognize the members of the National Education Partnership Task Force for their excellent work, dedication to the profession and vision:

National Education Partnership Task Force 

• David Layne, Chair
• Charles Blau, National Association of Independent Fee Appraisers
• Don Dorchester, Royal Institution of Chartered Surveyors
• Mike Evans, Board of Trustees, The Appraisal Foundation
• Mark Grace, American Society of Farm Managers and Rural Appraisers
• Heidi Henning, National Association of Realtors
• Don Rodgers, Association of Appraiser Regulatory Officials
• Magdalene Vasquez, Staff Member, The Appraisal Foundation 
• Alice Ritter, Appraisal Subcommittee (non-voting observer)
• Ted Freeman, Appraiser Qualifications Board (non-voting observer)

How it works:

You may contact the Hotline through the website, email, or call center. The Hotline provides referral information to complainants based on responses to a series of questions and drop-down menu selections. The complainant is provided with agency contact information for filing of a complaint. The website also offers tools and resources to enable complainants to determine the nature of their complaint, as well as other helpful information. If you seek to file a complaint against more than one party, proceed with a separate referral request for each party.

Access the Hotline at:

http://refermyappraisalcomplaint.asc.gov/ 

Toll free number: 877-739-0096

The Appraisal Foundation is conducting its annual search for qualified candidates to serve on the Appraisal Practices Board and the Board of Trustees. The deadline for completed applications is fast approaching on April 2, 2013.

Details for each are outlined below. Please note, however, that an individual may submit an application for the Appraisal Practices Board or the Board of Trustees, but not both boards at this time.

Appraisal Practices Board

There are four vacancies on the Appraisal Practices Board (APB). The APB is charged with the responsibility of issuing voluntary guidance on recognized valuation methods and techniques, which may apply to all disciplines within the appraisal profession. The APB meets periodically through WebEx meetings and conference calls. In addition to these calls, there may be one to two in-person meetings each year. Individuals serving on the board are compensated for their time and reimbursed for travel expenses. Those selected for APB positions will serve a one-, two-, or three-year term commencing on July 1, 2013.

Application packages and additional details for the Appraisal Practices Board vacancies are available here.

Board of Trustees

The Board of Trustees of The Appraisal Foundation is charged with funding the work of and appointing members to the APB, AQB and ASB, as well as providing oversight of these three Boards. The Board of Trustees meets twice a year, in the spring and fall. Trustees are reimbursed for travel expenses and are not compensated for their time. The individuals selected for positions on the Board of Trustees will serve three-year terms commencing January 1, 2014.

Application packages and additional details for the At-Large Trustee vacancies are available here.

Questions? Please contact Arika Cole, councils administrator, at arika@appraisalfoundation.org.

The first problem has been that the most important features of these homes are often invisible during a typical appraisal — either packed into the attic or programmed into appliances and other systems. The second problem has been that the standard Form 1004 includes one small box for “energy efficiency features” which is far too small to capture any important points about either the subject property or the comparables. Finally, while the appraisal industry has been providing a growing number of courses and certifications for appraisers working with high-performance homes, there has been no simple way to match these competent appraisers to assignments for high-performance homes.

That all changed 18 months ago when the Appraisal Institute introduced the Residential Green & Energy Efficiency Addendum.  Things got better once again with their release of v 2.0 of the Addendum last week.

The first version of the tool has been extremely well-received; it has worked magic to simplify how information is presented to or gathered by an appraiser, serving as a means to verify opinions of value for High Performance Homes and helping to identify competency requirements.  Version 2.0 is very consistent with the first release, simply clarifying some field names and some organization tweaks that make it easier to use. Perhaps the biggest change for the appraiser is that it spells out an answer to the question: Who should complete this addendum?

The answer is clearly this: whoever has the most first-hand knowledge with the performance and features of this home.

The bottom of Page 1 says:

The objective of this Addendum is to standardize the communication of the high performing features of residential properties. Identifying the features not found on the 1004 form provides a basis for comparable selection and analysis of the features. Builders, contractors, homeowners, and third party verifiers are encouraged to complete this Addendum and present to appraisers, agents, lenders, and homeowners.  (Author’s emphasis)

Just as when they’re provided with potential comparables for a subject property, appraisers have the ultimate responsibility for deciding what information provided on the addendum gets factored into the final appraisal file.

With this clarification, organizations from national green building certifications to local efficiency remodeling programs are now looking to make a populated addendum part of the standard paperwork that comes at the completion of a new-home build or a remodel project.  If you haven’t seen one of these forms cross your desk yet, that’s likely to change.  Green building had its strongest year last year with growth continued and expected to exceed one out of four appraisals in 2013, according to McGraw-Hill.  On the existing-homes side, programs like the Department of Energy’s Home Performance with Energy Star and Better Buildings Neighborhood programs are putting thousands of upgraded homes into the housing inventory through 2013 and beyond.

But the real beauty of the addendum is when you think about two other important groups using this form. First, when a completed copy of the addendum is attached to purchase or refinance paperwork, it can serve as a trigger for competency, indicating the type of experience needed for the job, especially when an AMC is making the assignment.  Likewise, when a completed addendum is attached to the file, it is a consistent method for documenting the opinion of value. While the form itself is not specified in underwriting standards, consistency of its use will mean it’s less likely to trigger any red flags with the file.

Keep an eye out for this Swiss Army Knife of a resource to show up in an assignment that passes your desk soon! And if you are interested in more information on the process for an appraiser to complete the tool, consult the Appraisal Institute’s related resources and courses, or other training on high performance homes.

Location:
The Sheraton Austin at the Capitol
701 East 11th Street
Austin, TX 78701

Meeting Agenda:
The purpose of the APB is to issue voluntary guidance on recognized valuation methods and techniques in the marketplace. This guidance is designed to be of assistance to appraisers, appraiser regulators and educators.
The following topics are on the Board’s meeting agenda:

• Identifying Comparable Properties
• Appraising Green Buildings – Background Competence
• VFR WG 2: The Valuation of Customer-Related Assets
• VFR WG 3: Control Premiums for Financial Reporting
• VFR WG 4: Contingent Consideration

Lodging Accommodations:
You may make a reservation with The Sheraton Austin at the Capitol, 701 East 11th Street, Austin, TX 78701 by contacting them directly at (512) 478-1111. Please note that The Appraisal Foundation no longer reserves “room blocks” for meeting attendees. Therefore, meeting attendees are responsible for making their own lodging arrangements at the best available rates.

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Please Note:
SRAG Meeting: As announced separately, following the APB public meeting, the State Regulator Advisory Group (SRAG) meeting will be held on Friday, April 26, 2013, at the Sheraton Austin Hotel at the Capitol from 1:00 p.m. to 5:00 p.m.

Note to State Appraiser Regulators: The Association of Appraiser Regulatory Officials (AARO) Spring Conference will also be held April 27-29, 2013, at a different venue. The AARO conference will be held at the Austin Omni Hotel located at 700 San Jacinto at 8th Street, Austin, TX 78701.
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Your online registration will assure proper seating at the meeting.
Practices Administrator: Staci Steward, 202-624-3052, staci@appraisalfoundation.org
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We are fairly near the end of the continuing education cycle for appraisers in my home state of Pennsylvania. Among other topics, I’ve been presenting changes to laws and regulations, which include the new Appraisal Qualifications Board (AQB) standards that go into effect in January 2015.  You can find the regulations here: http://www.appraisalfoundation.org/

The overwhelming response from existing appraisers is: “Do they just want to make us go away?”

The new requirements will include a bachelor’s degree, as well as — in most states — 2,000 hours of experience under a state-certified appraiser (the number of hours varies, but the requirement to gain experience under a state-certified appraiser is found in all states), plus another 75 hours of specific appraisal classes, including the 15-hour basic Uniform Standards of Professional Appraisal Practice (USPAP) course.

Most state laws require the supervisory appraiser to be present at the inspections, supervise the trainee, and basically do the appraisal. Pennsylvania regulations can appear somewhat contradictory: You can find this language: “Accompany the assistant during the physical inspection of the property until the assistant has logged 300 hours of appraisal experience or until the supervising appraiser determines the assistant is competent under USPAP to perform the physical inspection unaccompanied, whichever is the longer period,” as well a statement that the assistant “may not arrive at an independent determination of value.”  Source: http://www.pacode.com/secure/data/049/chapter36/chap36toc.html#36.13.

Couple this with the reluctance of some lenders to allow trainees to work at all on appraisals, and you can see how difficult it will be to become a state-certified appraiser.

Now let’s talk about the inspiration for this blog: the money side of things.

I’ve had trainees in the past. I could not afford to pay them much because when you’re doing something you know how to do inside out but taking time to explain to another person what you are doing, why you are doing it, and how it fits into the big picture, well, it takes at least twice as long. If you have children, think about training them to tie the laces on shoes. It’s the same idea. You can do it much more quickly by just doing it yourself.  You take the time to show your kids how to do it because (1) it’s a skill they need and (2) you love them.  On the other side of the appraisal equation, appraisal management companies (AMCs) want appraisals faster and cheaper than ever before.  Working appraisers who have already had to cut their fees have little, if any, money left to pay an assistant.  Under the new standards, assistants will be college graduates. Can we agree college graduates expect more than minimum wage? After all, they spent four (maybe more) years in school and probably have the student loans to prove it!

Now, assuming a good-hearted certified appraiser takes in a trainee and scrapes together some funds to pay the person. (Some trainees are coming from the brokerage side of the business, and continue to list and sell. That complicates the appraiser’s schedule, but that’s a whole other headache.)  At the end of the time period, that trainee takes (and hopefully passes) the state exam. The appraiser has just created a new competitor.  Some appraisers work from offices, but many of my students — if they do not have a brokerage or work in one — are working from a spare bedroom or den.  They don’t need a place to meet with clients. They just need Internet, computers, printers (rarely), and fax machines.  So, having completed the education, they don’t have a significant outlay for an office and equipment; in fact, many people already have all those things in a home office.  It’s easy to set up your own business and simply say bye-bye to that appraiser who trained you.

With one exception, the only appraisers I’ve encountered who train others are training family members. It’s part of a succession plan. And typically, it is not just exclusively appraisal — because the money isn’t as good as it used to be.  I’ve said this in class, and I’ll say it here: “I have two kids, both of whom have college degrees. If either one of them expressed a desire to get into appraising, I’d suggest brokerage instead because I see more stability of income there in the future.”

My kids might think about real estate appraisal as a career because I’m second generation in real estate.  How many other kids will they look at a job that requires a two-year apprenticeship — at next to no pay and, typically, with no benefits — and decide that this is a viable career path for them?

As market awareness of and demand for green homes grows, what is an MLS’s responsibility to its members to provide green fields—and what liability issues should be of concern?  According to studies by the Institute for Market Transformation, a nonprofit organization that promotes energy efficiency, energy benchmarking of commercial properties has revealed a simple truth: When information is disclosed to the market, the market has the opportunity to react to that information.  Market reaction can be reward or punishment—that’s the nature of a free market. But either way the consumer benefits from the competition as a result of disclosure.  The ability then to identify market reaction lies at the heart of both real estate investments and valuation.

Yet every MLS must consider its liability when considering green fields. Corrupt data occurs for two reasons: a lack of education or awareness on green building certifications and features, and/or a lack of accountability with regard to requiring supporting documentation when a green certification checkbox is marked by the broker.  The most cited example is confusion between the ENERGY STAR Home certification and ENERGY STAR appliances.

However, for the approximate 650 MLSs in the nation yet to instigate green fields (76 percent of the 860 MLSs in the country), the experiences of the early-adopter MLSs are invaluable.  Lessons learned:

• Require that supporting documentation (the verified checklist or unique identifier number) be uploaded within three days or the field is rejected.
• Reach out to the local green building/appraisal community for free review/commentary on the accurateness/relevance of proposed fields.
• Encourage brokers to take the first step and educate themselves on the growing green homes market estimated to be worth $87 billion to $114 billion between 2011–2016, according to McGraw Hill Construction–Smart Market Report 2012).

There are four vacancies on the APB. The Appraisal Foundation is always interested in expanding the diversity of its boards by considering applications from appraisers involved in various appraisal disciplines such as real property, business valuation or personal property.

Background and Qualifications:

The APB is charged with the responsibility of issuing voluntary guidance on recognized valuation methods and techniques, which may apply to all disciplines within the appraisal profession.

The APB guidance, known as a Valuation Advisory, focuses on topic areas which appraisers and users of appraisal services feel are the most pressing. The Board utilizes panels of Subject Matter Experts (SMEs), who are widely recognized individuals with expertise in the specific topic being considered, to research and detail all pertinent sources of existing information on the given topic.

Examples of qualifications that the Boards Nominating Committee will seek in candidates include the following:

• A minimum of ten years of appraisal experience
• A working knowledge of the Uniform Standards of Professional Appraisal Practice (USPAP)
• Familiarity with valuation methodology and techniques
• Experience in writing on valuation topics and/or curriculum development
• Experience with public speaking and/or teaching on valuation topics
• Experience in serving on a publically accountable board.

The APB meets periodically through WebEx meetings and conference calls. In addition to these calls, there may be one to two in-person meetings each year. Individuals serving on the board are compensated for their time and reimbursed for travel expenses. Those selected for APB positions will serve a one-, two-, or three- year term commencing on July 1, 2013.

Applications for the positions outlined above are now available on-line at The Appraisal Foundation’s website.

If you would like to request an application via email or if you have questions, please feel free to contact Arika Cole (arika@appraisalfoundation.org). When requesting information on the applications via e-mail, please use the phrase “2013 APB APPLICATION REQUEST” in the subject line, and please include your full name, email address and phone number.

For more information on the work of the APB, please click here for a free informational video.

NAR testified on concerns with the appraisal profession, particularly the role being played by appraisal management companies (AMCs). Other issues include the credible valuation of real property, including appraiser competency and local market knowledge and challenges in accurately estimating market value in stabilizing markets. Developing and reporting property values more accurately is critical to improving market performance, reducing risk and strengthening the housing finance system. Mr. Gregoire said “REALTORS^® know that an accurate appraisal is an important part of the home buying process and that a strong and independent appraisal industry is critical to restoring faith in the mortgage origination process.”

NAR has long been proactive in ensuring credible valuation of real property for our industry and embrace an all-encompassing approach.  Appraisals are the gold standard for mortgage origination but there is an important role for broker price opinions (BPOs), comparative market analyses (CMAs) and automated valuation models (AVMs). Through our subsidiary, REALTORS^® Property Resource (RPR), and our Valuation Committee, NAR is able to provide  comprehensive sets of data and tools for determining credible home values.