Shaun Fitzgerald, Fitzgerald Appraisals

Last week the Appraisal Foundation suspended the work of the Appraisal Practices Board (APB). The efforts were becoming too costly and in some cases the products were becoming too lengthy.

For those unfamiliar with the Appraisal Foundation, it is the only trade-related organization authorized by Congress to establish standards for a profession. Its originally chartered functions were the Appraisal Standards Board (ASB) and the Appraiser Qualifications Board (AQB). These standards and qualification criteria are enforced by the individual state licensing boards and commissions. Most people who use appraisal services are familiar with the product of the ASB – The Uniform Standards of Professional Appraisal Practice (USPAP). Typically, only appraisers and the state licensing boards are familiar with the work of the AQB; the AQB establishes the minimum educational and experience criteria necessary for licensure. Congress determined 25 years ago that appraiser qualifications and the appraisal work product were sufficiently important to the banking system, the economy and the public trust to warrant the establishment of the Appraisal Foundation.

After the real estate crash in 2008, only the oldest in the appraisal profession had ever experienced a “down market.” Questions arose about how to appraise in a declining market. Should short sales and foreclosure sales be employed as comparables? Should “only” short sales and foreclosure sales be used as comparables? No one really had answers. Or at least no one who had answers had put them in writing or organized a class or seminar about such a situation. The Appraisal Foundation was well suited for identifying the available expertise to answer these questions and could use its resources to disseminate the expertise. The Appraisal Practices Board (APB) was formed to quickly address the needs of the profession in the critical time after the crash. Subject matter experts were employed to provide the expertise; it was expected that the various appraisal organizations would develop the courses, seminars and workshops. “Appraising in a Declining Market” was a success – probably because it was absolutely needed, was developed relatively quickly and delivered fairly economically. Having the structure in place, the APB went looking for problems to solve – and found them. In all, eight Valuation Advisories were developed. They covered the basics and the fine points of many diverse topics. And they were very good. But no one used them!

It turns out they might be too good. The more effective the mechanism became for producing these advisories, the longer and more educational they became. And, the more costly it became to produce them. In all, about $1.5 million were spent. The first one was produced to address an emergency – the declining market; the later advisories were more like textbooks.

Most appraisers today, especially those preparing residential reports for lending purposes, are under tremendous time constraints. What they need to find, they need to find right now. Unfortunately, the APB is doing a great job of delivering the right answer, but the day-to-day practitioner is looking for the “right now” answer.

The APB is not dead, and it shouldn’t be. Their work has been suspended until a way can be found to deliver information that is clear, concise and timely. We are probably entering unchartered waters in the near future. Change is constant, but may be accelerated even more in the near term. The requirement for the APB remains. The challenge is to be efficient in development and delivery.

Shaun Fitzgerald is the owner of Fitzgerald Appraisals, Easton, Mass.