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.
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.
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.
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.