Competency under Uniform Standards of Professional Appraisal Practice (USPAP) is very clear. It says an appraiser must: (1) be competent to perform the assignment; (2) acquire the necessary competency to perform the assignment; or (3) decline or withdraw from the assignment. Instead of making this determination the appraiser’s responsibility as USPAP intended, some AMCs are taking it upon themselves to decide whether or not an appraiser is geographically competent to complete a report based on his proximity to the

subject.

So under this premise, if I am an appraiser who just started a new career in San Francisco and knows nothing about that market, I am assigned an order just because my new office address is within the geographic limits. What’s wrong with this picture?

Since the market began its downward spiral in 2008, appraisers everywhere have seen this scenario happen more and more often. Before the meltdown, nobody cared about where we came from, geographic competency or familiarity with the market. Scrutiny was minimal and most appraisals were accepted without issue. But as market values began to decline nationwide, some folks who stood to gain financially on the closing of a loan started looking into where the appraiser was located when the appraisal did not

“make value.”

I would like to see AMCs dig deeper to understand the credentials of their appraisers. I think a thorough analysis based on more than just geography would be a better method to gauge who is capable of appraising certain property types. This type of granular-level vetting could greatly enhance an AMC’s ability to provide accurate estimates for its clients. Knowing which appraiser is best suited to perform an appraisal on a million-dollar-plus property is truly a step in the right direction. You could have 20 appraisers who, based on the current system, are geographically competent to complete the assignment, but how do you know if they are competent to complete a high-dollar subject? How many have they done? Maybe they are great at doing 1,500-square-foot ranches, but have they ever done a 5,000-square-foot mansion?

I suggest that AMCs reach out to their panels and ask appraisers to send in samples of their high-end, unique property estimates so they can determine whether or not an appraiser is competent. Based on the review of the samples, AMCs can make an informed decision as to whether or not to engage a certain appraiser for a particular assignment. This way, next time the lender client has an assignment with a high-dollar loan amount, the competent appraiser can be engaged. AMCs and staff firms that want to ensure they’re engaging the best appraiser should move away from basing assignment decisions solely on geographic competency and seek to better understand an appraiser’s abilities in a comprehensive fashion. This is the only way to ensure the best appraiser is selected. Let’s face it: Competency outweighs geography.