Bulletproof Your Appraisal
Appraisers are constantly “looking over their shoulder” as scrutiny of appraisal reports has increased substantially. Added to this mix is the implementation of UAD; the general lender atmosphere since Dodd-Frank; the now common challenges of “low” appraisals by borrowers, sellers and real estate agents, as well as the indemnification clauses in contracts from AMCs to appraisers, which make appraisers more responsible than ever for future issues with real estate they have appraised. Appraisers are governed by Standard 2 in USPAP with respect to the reporting of an appraisal; they are also governed by any agreements with specific clients (such as the use of the Uniform Appraisal Dataset, or UAD). Appraisers must be prepared to justify data and adjustments in reports, and defend their reports if challenged. Finally, a well prepared work file is essential for an appraiser to build and maintain for each assignment. Many state licensing boards have cited appraisers for failure to have a complete work file, so we will also discuss what goes into the work file.