The variety of real property that appraisers are asked to review are nearly limitless. This is particularly true of commercial appraisers whose assignments may include appraising vacant land, office buildings, retail complexes, industrial properties, and special use buildings. Licensed and certified appraisers must be competent enough to perform any assignments they accept; however, no one appraiser is expected to be knowledgeable about every type of real estate in every location. Fortunately, there are clear guidelines for appraisers to follow to ensure their appraisals are always performed competently.

Competency Requirements

Licensed and certified appraisers are required by law to complete appraisal assignments, in compliance with the Uniform Standards of Appraisal Practice (USPAP). A key USPAP component is the Competency Rule, which specifically calls for an appraiser to be able to properly identify the appraisal problem to be addressed, have the knowledge and experience to complete an assignment expertly, and recognize and comply with laws and regulations that apply to the appraiser or the assignment.

Many factors influence competency. These include the appraiser’s level of familiarity with the type of property being appraised, the geographic location or market for the subject property, other elements affecting a subject property’s value, specific laws and regulations pertaining to the subject property and the intended use of the appraisal, and analytical methods required to affect reliable appraisal opinions.

Appraisers individually consider competency whenever they accept assignments that are outside their expertise. For example, an appraiser whose practice is primarily confined to single-family residential properties must address competency requirements if they accept an assignment to appraise an office building. If an appraiser traditionally works within a specific region, they must ensure that they are competent to complete assignments external to that location. Appraisers whose appraisals are usually intended for mortgage financing must carefully consider relevant laws if they perform appraisals for eminent domain purposes.

An Appraiser’s Three Choices

An appraiser has three options to address competency in any appraisal assignment. First—after reviewing their training and experience—they can conclude that they are indeed equipped to complete an assignment.

If the appraiser concludes they do not possess the competency to complete an assignment, they can acquire the skills and experience needed.

If the appraiser has neither the competency to complete an assignment nor the means to acquire that competency, they must decline the appraisal assignment.

Ways to Acquire Competency

When an appraiser initially lacks the proficiency to complete an assignment but takes the assignment with the intention of gaining that aptitude, they must always notify the client and then disclose in the appraisal report the steps taken to acquire such competency. There are a variety of ways an appraiser could gain additional skill.

The appraiser can undertake the study and training needed to acquire said competency. Another approach would be to ask a more experienced appraiser to join them in completing the assignment. Also, the appraiser could retain an expert to help in those portions of the assignment for which the appraiser does not have adequate training or experience. Whatever path the appraiser takes to acquire competency, they must notify the client and all intended users of that method.

Lacking Competency Doesn’t Equal Incompetency

Addressing the Competency Rule is one of the ways an appraiser can guarantee that their appraisal results are always credible. In fact, ensuring an appraisal’s reliability is of one of the professional obligations a licensed or certified appraiser has to clients and other intended users.

To some extent, appraisers prove their competency by recognizing and resolving competency issues up front. In professional appraisal practice, an appraiser who lacks the competency for a specific assignment is NOT necessarily incompetent; rather they are professional enough to both admit lack of training or experience and take actions essential to becoming adept for that assignment. The demand for competency provides appraisers opportunities to develop their skills and expand their practices.

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