New Qualifications / USPAP Explained

New Qualifications/USPAP Explained

by David Brauner, Editor

If you’ve been busy making a living, perhaps you missed or forgot that important changes to appraiser qualifications and to the Uniform Standards of Professional Practice (USPAP) took effect January 1, 2008.

Here is a brief overview of the changes with rational provided by John S. Brenan, Director of Research and Technical Issues, The Appraisal Foundation (TAF). You’ll find source documents on the current qualifications standards and on 2008 USPAP at the Appraisal Foundation’s website or at the bottom of this page.

Qualifications: for Whom the Bar Rises
Effective January 1, 2008 there are new, stricter qualification standards in place in the areas of education and experience for those entering the profession. Current licensees who aspire to a higher licensing level also face tougher standards. In short, the bar is raised significantly for those wanting to be professional appraisers.

According to John S. Brenan, Director of Research and Technical Issues, The Appraisal Foundation, “The intent of the changes is to raise the minimum requirements to become a real estate appraiser, thereby improving professionalism and ensuring public trust in the appraisal profession. When state licensing and certification was first enacted as a result of FIRREA in 1989, the federal financial institutions were deeply concerned that there might not be enough appraisers available to handle the volume of loan transactions that were projected.  As a result, the minimum requirements to become a licensed or certified appraiser were initially established at a relatively low level. Some modifications have been made over the years, but 2008 represents the biggest increase in requirements since the inception of FIRREA.  Nonetheless, the requirements to become an appraiser in the U.S. are still below that of many countries around the world.”

The new qualifications were adopted back in February 2004 and are the result of three years of preparation, according to the Appraiser Qualifications Board (AQB).

Continuing education requirements have not changed.

Education Requirements
The most significant changes in the new Criteria relate to qualifying education. The changes fall into the following categories: 1. There are college-level course requirements for the Certified Residential and Certified General classifications; 2. The required number of classroom hours in appraisal education has increased significantly in all three licensure classifications; and 3. There are minimum classroom hours of coverage requirements for specific topic areas, which are known as modules.

Certified Residential Licensing Requirements
Associates Degree or higher in any field of study or in lieu of the required degree, twenty-one (21) semester credit hours covering the following subject matter courses: English Composition, Principles of Economics (Micro or Macro), Finance, Algebra, Geometry or higher mathematics, Statistics, Computer Science and Business or Real Estate Law.

Certified General Licensing Level Requirements
Bachelors Degree or higher in any field of study or, in lieu of the required degree, thirty (30) semester credit hours covering the following subject matter courses: English Composition, Principles of Economics (Micro and Macro), Finance, Algebra, Geometry or higher mathematics, Statistics, Computer Science, Business or Real Estate Law and two (2) elective courses in accounting, geography, agricultural economics, business management or real estate.

Classroom Hours
In addition to the college-level course requirements, the appraisal education classroom hour requirement has increased for the State Licensed, State Certified Residential and State Certified General classifications. The Trainee classification remains unchanged at 75 classroom hours. The number of appraisal education classroom hours to become a State Licensed appraiser has increased from 90 hours to 150 hours; Certified Residential has increased from 120 hours to 200 hours; and, Certified General classification has increased from 180 hours to 300 hours.

Advancing Your License
If you’re working toward a higher licensing level currently, you should contact your state to see what the implications of these change are, according to Brenan. “The biggest implications involve those who may be in the process of qualifying for a state credential, or are considering doing so. Depending on how a state chooses to implement the 2008 criteria, individuals applying for a credential after January 1, 2008, might be required to satisfy all of the 2008 education, experience, and examination requirements, even though they may have commenced the process prior to 2008.  It is important for individuals seeking a credential to get clarification from their state appraiser regulatory agency as to how the 2008 criteria will be implemented in their state,” Brenan said.

Note that the Real Property Appraiser Qualification Criteria are minimum requirements; individual states may adopt requirements that are greater (or stricter) than the AQB criteria.  However, states cannot adopt criteria that are less than the AQB requirements.

USPAP 2008
USPAP 2008 is here. Among the changes are: the Appraisal Standards Board (ASB) adopted the deletion of the Supplemental Standards Rule and the deletion of the definition of “Supplemental Standards.” In addition, the proposed associated changes to the Scope of Work Rule, the Conduct section of the Ethics Rule, and the Competency Rule were approved. According to the ASB, the majority of appraisers, users of appraisal services, and enforcement officials recognize that Supplemental Standards include laws and regulations. Appraisers must comply with laws and regulations because of the nature of law itself, not because of USPAP. Thus, continued use of Supplemental Standards as a defined term was unnecessary.

Report Certification Requirements
The Board adopted revisions to report certification requirements related to the reliance of the signing appraiser on work done by others who do not sign the certification. According to the ASB, the revisions clarify an appraiser’s obligations when relying on work done by both appraisers and others who do not sign the certification. The changes removed the requirement that the signing appraiser have a reasonable basis to believe that work done by others was credible.

According to the ASB, this change was supported by the argument that the signing appraiser may not be qualified to determine whether the work provided by the other appraiser is credible. Further, the appraiser who certifies the work “done by others” is credible may be providing a misleading representation to the intended user.

Language was added clarifying that the signing appraiser(s) must not rely on the work of others if that appraiser has a reason to doubt that the work is credible. This edit was supported by the appraiser’s obligation to preserve public trust. The appraiser is responsible for the scope of work, including decisions to rely on the work done by others. The decision to rely on work done by others is governed by the same due diligence requirements that apply to judging the appropriate extent of research and analysis, namely that an acceptable scope of work satisfies the requirements of the Acceptability section of the Scope of Work Rule.

Edits and changes also were made to Highest and Best Use– Standard 7, Personal Property Appraisal, Development; STANDARD 8, Personal Property Appraisal, Reporting; and STANDARD 6, Mass Appraisal Development and Reporting.

Source Documents
Please note the preceding is a brief summary of USPAP 2008 only. You can also find the following source documents at Executive Summary of the 2008 Real Property Appraiser Qualification Criteria– a brief brochure highlighting the changes that take effect in 2008; A Guide for Understanding the 2008 Real Property Appraiser Qualification Criteria– contains numerous Q&A regarding the 2008 criteria; The Real Property Appraiser Qualification Criteria– the “bible,” which contains a section on the current criteria, as well as a section on the 2008 criteria.

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