The Appraiser’s Conundrum

By | March 7, 2021

The Appraisal Foundation has issued an exposure draft for Advisory Opinion 16. Advisory Opinion 16 is Fair Housing Laws: Avoiding Bias in Real Property Appraisal and Appraisal Review Development and Reporting. Unlike other exposure drafts, the text of the advisory opinion has been rewritten. The traditional strike through of word or phrase changes is nonexistent. The Appraisal Foundation acknowledges  “the Advisory Opinion was extensively rewritten” Comments on the changes are due to The Appraisal Foundation by March 31, 2021 via SurveyMonkey or email; [email protected].

Although an Advisory Opinion is not a standard of practice, it does express what is expected of appraisers. Every appraiser needs to read this exposure draft. It could be a game changer for appraisers.

If you have ever completed an appraisal report for a lender or an appraisal management company you know very well, a human rarely reads the commentary in the appraisal report.  The advisory opinion suggests more specific data, explanation and documentation is expected. This goes in a direction opposite of the GSEs who require vague and often misleading check boxes. Rumor has it the new “modernized” GSE appraisal forms will require even more check boxes so a computer can read and capture the data.  We all know the current UAD classifications are vague and unclear; it seems things will only get worse with the GSEs version of modernization.  This advisory opinion begs the question “Does the Appraisal Foundation think the GSE’s have gone rogue?” 

The advisory opinion is about Fair Housing Laws. Most of us think of discrimination against classes of people when we hear that term, however the illustrations within the advisory opinion do not directly connect to that common association. The illustrations stress the importance of explaining the specific differences in detail and how factual information avoids the accusation of bias.

Social media posts have exploded with comments over the proposed advisory opinion. Most have not been positive to the change. It is easy to vent on social media, especially in private groups. but how many that commented on social media have actually commented to the Appraisal Foundation?

The exposure draft is 11 pages including the rationale for the change. Every appraiser should read the exposure draft and seriously think about what is being proposed and the methods being suggested. Then provide your feedback to the appraisal foundation. Social media posts are optional!


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3 thoughts on “The Appraiser’s Conundrum

  1. Robert N Mossuto Jr

    I for one DID send the ASC my comments. I sent a 3-page document outlining how ate up this document is and the ramifications its going to have on appraisers; specifically, in the number of complaints that will be filed to state boards if borrowers compare their appraisal to the advisory opinion and words the advisory opinion suggest appraisers not to use in reports. The borrower will not corelate the difference between advice and rule. They will just see the fact that the appraiser used the word average and file suit!

  2. james loizou

    I just submitted my response to what I believe is a ridiculous AO. I agree with Robert Mossuto that it needlessly opens the flood gates to lawsuits, while does nothing to improve the quality of appraisals or the public trust. This again seems to evolve out of the idea that appraisers are guilty until proven innocent.

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