These are lean times for many appraisers. Many of us have looked at alternative ways to bundle and market our professional services. Some appraisers have been selling comparable sales data to clients. It seemed like a good way to use data more than once, thus leverage it, thus make it into a profit center.

Here’s what happened: The “client” would call the appraiser asking for comparable sales data. The client might or might not specify the subject property, but did indicate its bedroom and bathroom count, its size, its age, etc. The appraiser would then amass com parables fitting the parameters of the “client’s” request but not analyze the data, nor form a value opinion based on it. The “client”, then, drew its own value conclusions and the appraiser was able to make a few bucks but without doing an appraisal. Note this practice was not widespread, but it was a way some appraisers were able to sell their services providing something else other than an appraisal.

Clearly, however, many appraisers were uncomfortable with this. They were sufficiently uncomfortable with it that they felt compelled to ask The Appraisal Foundation (TAF) if this scenario of providing data (but no analysis or value opinion) was proper under USPAP. The answer to their question is on the August 2009 TAF Q&A. So as not to take anything out of context, I have included the entire quote. Note the first bullet-point:

“Question:
If an appraiser is bound by USPAP for a particular assignment, when must the appraiser comply with the USPAP appraisal reporting requirements?

“Response:
Whenever a value opinion is communicated, compliance with USPAP’s appraisal reporting requirements is required.It may seem obvious in many cases that an appraiser must abide by the appraisal reporting requirements. However, in other cases it is not as obvious, such as the following examples (I have emphasized the answer; it was not in bold in the publication):

“Selecting and providing a client with comparable sales for a known property is an appraisal assignment as defined by USPAP.
Informing a property owner that their property tax assessment is too high is an appraisal report as defined in USPAP
Providing an opinion of market rent is an appraisal report as defined in USPAP.”

Therefore it appears that if a “client” were to ask an appraiser for a list of comparable sales in a specific neighborhood (but nothing more), the appraiser could provide these data, yet that would not qualify as an appraisal. However, if the “client” were to specify either the subject property or the property type in that neighborhood, TAF would consider compliance with this request to be an appraisal. Therefore, in carrying out an assignment such as this, the appraiser would need to comply with Standards ONE and TWO of USPAP.

Note that TAF has no authority to enforce appraisal law; that is the exclusive province of the individual states. However, now that this decision & interpretation has come down from TAF, it is reasonable to conclude that TAF will expect the states to enforce it.

What lesson can we learn from all of this? Perhaps it is to stay current with the Q&As TAF publishes so we do not find ourselves on the wrong end of a subpoena from the state.

(Go to http://www.appraisalfoundation.org/ to see the entire document).