Today, April 23rd, Allterra Group is hosting a free webinar on appraiser independence and the best practices to use when communicating. What are the limits of communication for real estate appraisers, when interacting with borrowers, listing agents, selling agents, buyers, sellers, clients or even AMCs? Recent laws and regulations concerning appraiser independence appear to have put restraints on the type of information that can be communicated to or from appraisers. Is appraiser independence compromised if the appraiser has any communication with REALTORS ® or borrowers? Appraisers have questions, too, about confidentiality when communicating with persons other than the client. Join us as two subject-matter experts, John Brenan and Frank Gregoire, discuss this topic of crucial importance to the real estate community. We were able to speak with John and Frank to discuss the upcoming webinar and find out what appraisers should know before the register for this webinar.
Buzz: Thank you both for taking the time to answer some of our questions. Can you both tell us a little bit about your history in the appraisal industry?
John: I've been very fortunate to experience a rather broad cross-section of the appraisal profession. My appraisal career started well over 30 years ago as a residential appraiser for a savings and loan association. I was subsequently trained as a commercial appraiser and did that for a number of years before accepting a position managing a residential appraisal district with a large financial institution. I was then hired by the State of California as Chief of Licensing and Enforcement in their state appraiser regulatory agency (California is one of only a few states that don't actually have an appraiser "Board"). After 8 1/2 years in that role with the largest state appraiser regulatory agency in the U.S., I went to work for The Appraisal Foundation in October 2003 as Director of Appraisal Issues.
Frank: Due to being a very poor real estate salesman, I got my start in real property appraisal shortly after becoming a licensed real estate broker in 1977. After a few years or writing and teaching real estate licensing and continuing education courses, I embraced appraisal as a full-time career in1982. After FIRREA, I became a State-Certified Residential Appraiser in Florida, and owned and operated a residential firm with my father. I served eight years as member of the Florida Real Estate Appraisal Board. That, along with the retirement of my father, contributed to the downsizing of the firm from seven appraisers to one, and the change in focus from mortgage appraisal work to private appraisal, expert witness services, and litigation consulting. My current engagements include serving as an expert witness in two federal cases, and consultations on several active state and federal actions.
Buzz: Can you briefly tell us about appraiser confidentiality and why it is so important to appraisers?
John: Appraiser-client confidentiality is crucial to public trust. Clients must be assured that any confidential information they provide to appraisers will be treated appropriately. Likewise, clients need to have every confidence that appraisers will not communicate the analyses, opinions, and conclusions developed for an appraisal to anyone other than the party or parties the client specifies. This is why the Confidentiality section of the ETHICS RULE in USPAP is so significant.
Frank: Rather than "appraiser confidentiality" I believe respect for, and compliance with the Confidentiality Section of the Ethics Rule of USPAP is important. Compliance with state laws related to confidentiality is also necessary. Appraisers have no choice about compliance, but must learn how to operate a business within the constraints of appraisal standards and state law. Developing Communication Best Practices is part of ensuring compliance with USPAP and state laws.
Buzz: John, as Director of Appraisal Issues for The Appraisal Foundation what issues really affect appraisers the most concerning this topic
John: Most appraisers understand they cannot communicate "confidential information" without the client's consent. However, some appraisers do not understand that to be considered "confidential" in USPAP, there is a two-fold test: the client must notify the appraiser that the information is confidential and the information cannot be available from another source. If the information does not satisfy both tests, it is not considered to be "confidential information" under USPAP.
Appraisers are also prohibited from communicating "assignment results" to anyone other than the client and parties specifically authorized by the client. Many appraisers know that the final opinion of value (i.e., appraised value) is an assignment result, but each appraisal report contains multiple analyses, opinions, and conclusions, all of which fall under the category of assignment results.
However, communication between appraisers and their client is essential for the exchange of appropriate information, including the intended use of the appraisal, the scope of the work necessary for credible assignment results, and more. The exchange of relevant information between appraisers and real estate brokers – including terms of the sale, relevant comps, and home improvements – can help an appraiser develop a more credible opinion of value.
Buzz: Frank, as a licensed realtor what would you like appraisers to know about appraisal confidentiality?
Frank: First: There is no such thing as a licensed REALTOR®. I am a licensed real estate broker and a State-Certified Residential Appraiser. A REALTOR® happens to be an individual involved in the real estate business (real estate brokerage, management, appraising, land development or building) with membership in the National Association of REALTORS®. Many appraisers, with no real estate license, are members of the National Association of REALTORS®.
Second: Rather than "appraiser confidentiality" we should be cognizant of the appraiser's obligation to respect confidentiality in their communications.
Third: It's important to understand communication is a vital part of the appraisal profession and the appraisal business.
Finally: I believe that effective communication with parties other than your client is possible with full USPAP and state law compliance.
Buzz: Why is this webinar a must watch for appraisers?
John: Appraiser independence has become more prominent with implementation of the provisions in the Dodd-Frank Act, as well as other rules and procedures. Because of this renewed focus, some have suggested that the pendulum has swung too far back the other way, believing that you can't communicate with an appraiser without running afoul of the law. Appraisers need to clearly understand the type of communication that is not only permissible, but in some cases required, to perform appraisal assignments properly.
Frank: As a result of Dodd-Frank amendments to several laws, including the Equal Credit Opportunity Act, borrowers (and their agents) will have easier access to valuation reports and appraisal reports. Questions are bound to arise, and appraisers will be the likely recipient of many of those questions.
Buzz: What types of things will appraisers learn during this live webinar to assist them in their appraisal work right now?
John: Proper communication is critical in developing a proper scope of work for each appraisal assignment, and in developing credible assignment results for the intended use of the appraisal. Appraisers will gain a better understanding of what communication is permissible, and what is prohibited. In fact, The Appraisal Foundation recently created an infographic regarding appropriate communications, which can be downloaded by clicking HERE
Frank: Participants in the webinar will see what buyers, sellers, and agents are reading and discussing concerning their interactions with appraisers. We will also explore the difference between communications with Interested Parties before and after the development and reporting of assignment results.
Buzz: What is one thing appraisers should know before registering for your upcoming live webinar?
John: Appraisers must effectively communicate with clients and others in order to provide appraisals that include credible assignment results. For each appraisal assignment accepted, appraisers need to determine what type of communication is necessary; simply accepting an appraisal "order" and producing a "typical" appraisal report is not in an appraiser's best interest.
Frank: This answer is likely similar to what John has to say, but I'll go for it nevertheless.
Appraisers have every right to use the Confidentiality Section of the Ethics Rule as a shield and shut down communications, but their appraisal business can be enhanced by lowering the shield and developing Best Practices for effective communication with Interested Parties.
Buzz: We really appreciate you taking the time to preview the upcoming webinar. We can't wait to watch the whole thing live on Wednesday, April 23rd at 2PM EST.
If you haven't registered yet and would like to sign up for the FREE webinar CLICK HERE to attend.
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