Appraiser Independence Requirements, clearing up the myths

Now that some time has passed since the inception of the Appraiser Independence Requirements, there has been much debate over exactly what these mean to Appraisers. We typically hear that we should not have any type of conversation with Realtors, Mortgage Brokers, Lenders or any other parties with an interest in a real estate transaction. However, there are exceptions that we all should be aware of, in those instances where additional information could prove vital to a valuation.

These exceptions as stated in U.S. Code 1636E:

(c) Exceptions:

The requirements of subsection (b) shall not be construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, consumer, or any other person with an interest in a real estate transaction from asking an appraiser to undertake 1 or more of the following:

(1) Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.
(2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
(3) Correct errors in the appraisal report.

Case in point, when a Realtor meets you at a property and provides a list of potential comparables that they feel best represent the subject property. You are within compliance of AIR to accept those and even have a conversation with them to understand why it is that they feel these are the best comparables. In addition, they may have firsthand knowledge or details surrounding a particular home and/or circumstances surrounding a sale that may not be a matter of public record. It may be that you find these to only be “sales” and not truly “comparables”. That is up to you, the local expert, to make that determination. It is good appraisal practice to incorporate those “sales” along with any others that you find in your research within the narrative of your report. This will allow the reader(s) of your report to quickly realize why the comparables you have chosen truly are the best comparables. Data and protocols drive our industry, but behind it all are our people.

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