Quality Complaint Documents: When Things Go Awry In Commercial Appraisal
What to do when things don’t go as planned in the commercial real estate appraisal management process
Recently, we shared about compliance management – just one of the many super-important pieces of the commercial appraisal management puzzle. Due to the rapidly-evolving commercial real estate market and all of its moving guidelines and regulations, compliance is crucial information for financial institutions, lenders, servicers and investors alike. It assures that every stage of the appraisal process abides by state and federal regulations, among any other required guidelines.
But what happens when things don’t go as planned? What happens when there’s a regulation that was overlooked or a guideline that was misinterpreted? When one of the parties you’ve paired with overlooks a step in the process, the entire appraisal process can go off track.
But let’s back track for a second…
We don’t want to scare you off or have you thinking you should fear pairing with a professional commercial appraisal management agent/company. In fact, that’s the last thing we want to do! We assure you that when you pair with a trusted professional, they are immensely more likely than not to be proficient in all aspects of quality compliance. Instead, we want this post to act as a valuable resource of information, so that you would be prepared for what to do in the event that the process doesn’t play out as smoothly as expected.
Quality complaint guidelines
What usually goes wrong is that an appraiser/appraisal management company overlooks a state or federal guideline. The Uniform Standards of Professional Appraisal Practice(USPAP) is a set of laid-out guidelines adopted by the Appraisal Standards Board of the Appraisal Foundation.
USPAP was put in place and is still used to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers. These standards are enforced by the entire nation (including territories and the District of Columbia). USPAP is a broad set of minimum standards governing appraisal practice.
The Appraisal Foundation publishes and frequently updates guidelines that commercial appraisal management companies must comply with. Fortunately, these guidelines are accessible to all and clearly detail the use of appraisals for mortgage lending and real estate financing purposes. To access and review all of that info and more, click here.
So, what could go wrong?
You may be wondering what would qualify as a USPAP violation. Potential violation examples include:
- The deliberate creation of false or misleading statements in an appraisal, appraisal review, or appraisal consulting report
- The communication of assignment results [to any rightfully involved party] with the intent to mislead or to defraud
- The communication [to any rightfully involved party] of a report that is known by the appraiser to be misleading or fraudulent
- Creation or performance of an assignment in a grossly negligent manner
- Failing to act independently and impartially in the development and reporting of an appraisal or appraisal review
- Accepting an assignment that includes the reporting of predetermined opinions and conclusions
- Not protecting the agreed-upon, confidential nature of the appraiser-client relationship
As opposed to mandating specific appraisal methodologies, USPAP requires appraisers to be aware of, understand, and correctly employ techniques necessary for producing quality and compliant assignment results in an appraisal.
A look in the federal direction
The Appraisal Subcommittee, founded in 1989 by the Federal Financial Institutions Examination Council, oversees the compliance of federally-related real estate appraisal processes. The ASC’s general responsibilities include:
- Monitor certification and licensing requirements of appraisers established by the states and territories of the nation
- The ASC is authorized to take action against non-complying states
- Monitor requirements established by the Federal financial institutions regulatory agencies regarding appraisal standards for federally related transactions
- Maintain a national registry of those licensed to perform appraisals
- Monitor and review the practices, procedures, activities, and organizational structure of the (aforementioned) Appraisal Foundation
For more information on federal compliance, click here.
Avoiding a misstep
The most efficient way to avoid having to deal with quality commercial appraisal complaints is to do your homework, as the consumer, before deciding on a commercial appraisal management company to represent your project.
Consider the following aspects before deciding on a management company:
- Is the company in question made up of trusted, experienced, and properly licensed individuals? For example, the MAI designationis held by experience appraisers in the valuation and evaluation of commercial, industrial, residential and other types of properties. Many of our appraisers at Oxford Commercial Real Estate Management carry the prestigious MIA designation in their titles
- Look for a company that keeps you in the know throughout every step of the process. At Oxford, our secure online portal is available 24/7, and we monitor every detail of a process so that you stay informed
- Be sure to review testimonials, case studies, or other proofs of compliance that the said company has to offer. One way to ensure a trusted process is to look at past processes
Rest assured, compliance and a smooth process should 100 percent be expected when you put your trust and property in the care of an appraisal management company. The best way to avoid any issues is to do your research and find a trusted company with expertise before partnering. You need someone like Oxford.
For the past 22 years, the experts at Oxford have been committed to expertise and service. Get in contact with our appraisers today. We look forward to hearing from