This
is a summary of a formal needs analysis I conducted in March and April 2012
regarding the problem of appraisers continuing to violate the Uniform Standards
of Professional Appraisal Practice (USPAP) and receive reprimands and
enforcement actions. A needs analysis is a formal analysis of a problem to
determine if it could be solved by instruction. Possible causes of the USPAP problem
are misunderstanding about what USPAP is, separation of appraisal principles
instruction from USPAP instruction, or even an attitude about the appraisal
profession. I prepared a needs analysis by obtaining additional information
from two separate survey sources, an online survey of appraisers, and a set of
personal interviews of instructors and officials. The results of the interviews
and surveys were analyzed and summarized here, with recommendations for
possible instructional solutions and further study.
Current and Desired Conditions
The current condition is that many
appraisers do not understand or apply USPAP correctly in appraisal practice.
While the majority of appraisers understand that USPAP is the minimum standard,
they don’t always know where and how to apply it correctly during the appraisal
process. The desired condition is that
appraisers (and individuals who call themselves appraisers) recognize the
importance of their role as an independent, impartial, and objective analyst.
Appraisers consider USPAP in every assignment as well as in their role as
appraisers. Appraisers follow the sequential steps in the appraisal process and
are generally able to distinguish between USPAP issues and assignment
conditions, such as lender guidelines, laws and regulations apply to a type of
assignment, or engagement requirements. Appraisers use USPAP as a reference
source when they encounter such issues. Appraisers are able to explain to and
educate potential clients or new appraisers what USPAP is and why it is
important to appraisal practice.
Findings
Based on the survey and interview instruments, appraisers agree with instructors and enforcement officials that problems still exist for appraisers to fully understand USPAP. While the appraiser survey indicated that the USPAP document is inconsistent, too lengthy, boring, and “not instinctual,” the interviews with instructors and enforcement officials indicated a belief that not enough appraisers have taken the time to read it. However, all agree that the problems exist not simply because of appraisers or the USPAP document itself, and that the problem is deeper. Responsibilities of and opportunities for solutions were identified across the spectrum, including appraisers, course providers, instructors, state agencies, and The Appraisal Foundation, as shown in Chart 1.
Both
instruments indicated that appraisers have trouble with USPAP concepts due to
confusion between USPAP and guidance and assignment conditions, as well as not
understanding the relevance to their daily practice. Both instruments indicated that appraisers
would feel more comfortable with USPAP if it were better integrated into other
continuing education as well as foundational courses and apprenticing.
Both
instruments indicated that USPAP training for appraisers as well as
recertification training for instructors would be better served in live
classroom, rather than online or independent study. However, both instruments
also supported certain circumstances where such distance learning would be
appropriate. While more appraisers favored small classroom format of ten
students or less, they also cited the same reasons for their opinions as
proponents of larger class sizes.
Appraiser Survey
The
survey included three multi-part questions. The first question asked
respondents to agree or disagree with several statements about USPAP concepts and
the current USPAP education requirement. Respondents were also given a choice
to select “I don’t understand the question.” These statements were provided to
gage appraisers understanding of key concepts in USPAP and to determine if they
believe the current USPAP courses are working. As can been seen in Graph 1, the
majority of appraisers completing the survey agree with all statements. The
largest number of appraisers indicated that they understand how the appraisal
process presented in USPAP fits into appraisal practice, as the individual
standards rules in USPAP present a clear process for completion of an
appraisal. However, one appraiser who also identified himself later as a USPAP
instructor, disagreed with the statement and made a point to indicate that
USPAP does not include an appraisal process. This confirmed that there may be
variety of interpretations of USPAP even among instructors.
The
lowest number of appraisers agreed that they could distinguish between a
“USPAP” issue (such as an ethical dilemma or standards requirement) and a “laws
and regulations” or engagement issue. The latter present assignment conditions
for the appraiser under which the assignment is made. They are often confused
by appraisers. For example, USPAP does not require that the appraiser inspect
the property in question, as valuation of some property may be made simply from
reviewing maintenance records, or in the case of property that was destroyed,
may not be possible. However, certain clients require that the appraiser
inspect the property and even define the level of inspection. Therefore,
inspection of the subject property is an engagement condition, not a USPAP
issue. However, if the appraiser accepts that assignment under the condition
that he will inspect at the minimum level required by the client, it is a
violation of USPAP if he does not comply with the client’s request.
Also
indicating lower numbers of appraisers who agree are statements to the fact
that there is value to taking the USPAP update class every two years, feeling conformable
to explain what USPAP is, and considering USPAP during preparation of assignments.
This last statement also had the highest number of “disagree” responses. Despite lower numbers of appraisers who can
explain what USPAP is or can distinguish USPAP from non-USPAP issues, most
appraisers felt like they usually learn something in USPAP classes.
The
second question asked respondents to identify, from a list of training possibilities
in the past that would have been more likely to produce a higher comfort level
with USPAP today. The respondents were able to select multiple answers as well
as provide additional responses. As
indicated in Graph 2, most appraisers did select multiple responses, although
respondents were also provided with “I’ll never feel comfortable with USPAP”
and “I’m already comfortable with USPAP” selections. The majority of the
responses (57%) indicated that they would feel more comfortable with USPAP
today if it were integrated into other continuing education courses. Another
popular choice was if USPAP were integrated into the basic principles cases,
with others believing if USPAP were taught by their mentor during apprenticeships
they would feel more comfortable.
The
majority of those providing reasons for feeling comfortable with USPAP indicate
that they are USPAP instructors or serve appraisers in another capacity relate
to USPAP issues. Independent study and attending good quality classes were also
cited. Of those who cited reasons for not feeling comfortable with USPAP, the
majority of respondents cited problems with USPAP itself, such as being unclear,
revised too often, or revisions not making sense. Others cited the way USPAP is
taught as an issue, such as comingling appraisers of different practice areas
into the same class (which detracts from understanding the application of USPAP
in daily practice). Others suggest inconsistency among instructor’s interpretation
of appraisal concepts affects how USPAP is applied, which correlates to the
issue identified previously under the first question.
Additional
responses cited but not included in the table above as reasons for lack of comfort
with USPAP include that many of our clients do not understand USPAP and ask
appraisers to violate standards. In addition, with many assignments, time is of
the essence and appraisers find following USPAP in such cases difficult. Both
of these responses are troubling, as USPAP itself provides for minimum
standards. If the appraiser is faced with a decision to either satisfy the
client or follow USPAP, and cannot do both, then the appraiser is obligated to
withdraw from the assignment.
The
third question asked of the appraisers is how USPAP would best be taught. As
presented in Graph 3, the highest percentages of selections were small, live
classes with 5 to 10 students maximum and integrated with other material
(rather than a standalone USPAP class). Another popular selection was larger
live classroom. Both independent study and online courses received the least
number of selections, with respondents indicating that appraisers benefit from
class discussions. Both those selecting smaller class size and those selecting
larger class size each indicated an increased willingness by participants to
share in discussion as a reason it is superior.
Constructive
suggestions from or opinions of appraisers indicate a lack of consistency among
USPAP instructors, either shorter or less frequent update classes, longer
classes integrated with other portions of the appraisal process, and to increase
the instruction in applicability of USPAP to daily practice.
Instructor Interviews
Individuals who held positions as either
USPAP instructors or enforcement or standards officials in the appraisal field
were interviewed via telephone. The
questions related to their sense of how appraisers understand USPAP, where
problem areas occur, and how USPAP could be better integrated into other
courses. They were also asked what instructors or The Appraisal Foundation
could do to make the existing classes more effective. I also asked them to
respond to or expand select responses from the appraisers that I had started to
receive, including lack of consistency between instructors, we should be
educating the public, we should organize more practice focused USPAP classes,
and the two-year revision period is too short.
As
summarized in Table 1, the interviewees agreed that appraisers show a wide
range in levels of understanding; one respondent likened it to a bell curve,
with the majority of appraisers having some understanding, with fewer having
either more or less than the majority. They recognize that there are those
appraisers who aspire to be professional appraisers and see USPAP as only a
minimum standard, seeking to improve their work, while there are others who simply
don’t know what they don’t know.
In
terms of problem areas, interviewees indicated that appraisers confuse
guidelines for specific practice areas with the standards, and that appraisers
have difficulty applying the standards in daily appraisal practice.
Interviewees also indicated that current education does not stress enough of
the appraiser’s role as an independent, impartial, and objective analyst, and
that many appraisers lack solid foundations in basic appraisal principles. The
existing online USPAP classes are also offered as part of the problem as they
emphasize rote learning, without adequate presentation.
Interviewees
were also asked to expand on comments and suggestions received so far from the
online appraiser survey. They agreed that USPAP instructors should prepare more
for class and convey consistent messages. Instructor recertification has
recently been only offered online and it was identified that perhaps
instructors would also benefit from live classroom offerings for the same reasons
it was suggested for appraisers. Instructors
should also be more proactive in reporting incidences of where the textbook
language is inconsistent with USPAP to the AQB’s Course Approval Program. Interviewees
believe it is up to the appraisers to educate their clients throughout the
appraisal process, but classes have been developed and offered in the past for
non-appraisers. In addition, The Appraisal Foundation is making a concerted
effort to raise awareness of the public.
Interviewees
agreed that appraisers would benefit from more practice specific classes,
especially to address USPAP issues. The Appraisal Foundation provides for the
National USPAP courses, but only to fill gaps. It is up to individual course
providers to design and offer such courses for their students. On the topic of
the two-year revision period, most interviewees indicated that two years is not
too rigorous, and has even been shorter in the past. If more appraisers were
proactive in understanding the standards of their profession, they would not
feel such revisions are too frequent.
Recommendations and Need for Instruction
Suggestions
provided by appraisers and officials provide areas for additional research,
improvements to existing instruction and courses, as well as potential areas of
new instruction. In addition, the interview instrument indicated that current
appraisers need to improve themselves by thinking more critically about their
profession and their role as an appraiser. Some of these suggestions are
related to attitudes of appraisers, and cannot be solved simply through
instruction.
Suggestions
for improvements to existing instruction include both methods that instructors
can use in the classroom as well as additional training opportunities for instructors.
Instructors can bring in more case studies and problems to solve in class to
supplement the existing problems provided in the material. Classes can be
offered to specific groups of appraisers, such as those who focus on
residential lending, or those who provide land appraisals, thereby allowing
more discussion time in class to the relevance of the material to individual
practice areas. In addition, it was suggested that the current practice of
online instructor recertification be conducted in classroom to ensure more
consistent methods and interpretation of the material.
In
addition to revisions that instructors can make to existing courses, suggestions
for revised or new courses were identified. The periodic USPAP update course
can be revised to include relevance for individual practice areas, such as
residential appraising or appraisers who appraise for litigation. Revisions to the USPAP course are also
suggested focusing the material on problem solving and critical analysis. New or revised courses are also suggested for
non-USPAP courses, such as instruction in review appraisal or the appraisal
process that integrates relevant portions of USPAP into the material.
Based on the survey and
interview instruments, appraisers agree with instructors and enforcement
officials that problems still exist for appraisers to fully understand USPAP. Both survey
instruments indicated a real need to integrate USPAP education into
other appraisal courses. Selected new or revised course topics suggested
based on the needs analysis include:
- Distinguishing between USPAP, guidance, and other assignment conditions Relevance of USPAP to daily practice
- Revise existing principles or continuing education classes to integrate concepts and definitions as used in USPAP.
- The Appraisal Foundation is considering other educational options, such as a mini-course that would serve as an introduction to USPAP and the profession for new appraisers. Such a refresher class would have benefits to working appraisers as well.
- One interviewee indicated the presence of a USPAP for non-appraisers class – this could be updated and reissued for clients and other users of appraisal services.
- A critical look for working appraisers at their profession and the role of appraiser to get appraisers to want to improve their skills and work and to get involved with profession.
- Everyday case studies and problem solving (all agree that appraisers need practice in solving problems and critical thinking)
- USPAP courses designed for a specific type of appraiser (such as those performing residential lending work, or tax appeal, or bankruptcy).
- Classes for appraisal instructors about how to better integrate USPAP into the material they teach.
- The appraisal process as presented in USPAP.
Suggestions for new or revised courses were not only made for appraisers. The USPAP instructor recertification course, which has recently only been offered online, has been suggested to be offered live classroom again to ensure more consistent interpretation among instructors. The instructor recertification courses could also provide additional context as to why USPAP says what it does, which would later be imparted to appraisers. In addition, with the suggestions to integrate USPAP into non-USPAP classes, there will be a need to train instructors who have not had USPAP instructor training to demonstrate how to integrate concepts and problems in these other courses.
Additional suggestions not related to instruction include requesting The Appraisal Foundation’s Appraisal Standards Board to revise the document less frequently and reconsider if the 7-Hour USPAP course (or its equivalent) is necessary in its present format. In addition, suggestions for the Appraiser Qualifications Board’s Course Approval Program and individual state agencies that also approve courses to consider revising course approval criteria with either minimum USPAP content or more integration with USPAP concepts and terminology. More importantly, appraisers and officials alike agree that some appraisers need to take a more active role in understanding their profession and take responsibility for minimum professional standards.
Lastly, because the survey was relatively small (53 responses), it is not known if it is a true sample of all appraisers. A larger scale survey of appraisers is needed to ensure a statistical sample across many different states and with varying practice areas. The survey can be expanded to include additional questions, such as how often appraisers refer to the USPAP document, if it will help understand or solve the problem.
The intent of the USPAP needs analysis was to identify if instruction can solve the problem of appraisers continuing to violate the standards that apply to their profession. The result is that, yes, there are instructional solutions as well as others. My posting of the results is to encourage appraisers to share the results with other appraisers, their instructors, course providers and state agencies to effect change not only in USPAP update classes but in all appraisal education. Each appraiser, instructor, course provider, state agency, as well as The Appraisal Foundation has responsibilities and opportunities regarding the problem and its solution.
I look forward to your comments. My next post will be a summary of the 2012 High Desert Economic Summit held in Victorville on April 11th.
