Appraiser Collaboration I

As an independent appraiser, wouldn’t it be nice if you could easily have other appraisers or field experts, external to your company, collaborate on appraisal components where you feel you otherwise lack expertise? Certainly, within large commercial appraisal companies it is common for two to three appraisers to sign a report. In fact, if a report is written by a junior appraiser collaborating with a supervisor, it is often a legal requirement to have the report signed by the supervisor. And in many companies, an MAI is required to sign the certification on all reports that go out.

Yet, for experienced and certified appraisers who work as independent appraisers, it is difficult to collaborate with other appraisers because of communication, compensation and liability issues that arise. Appraisers simply do not know how to deal with these; in fact, a suitable infrastructure for supporting such arrangements does not exist for them.

According to USPAP Standard 2-3 (b), all contributing appraisers who sign any part of the report must sign the certification. So, to be clear, contributing appraisers do not need to sign the certification, as long as they don’t sign any part of the appraisal.

According to USPAP Standard 2-3 (c), if an appraiser’s report depends on the contributions from non-signing appraisers, then he has to take responsibility for deciding to use their contribution. And that means he must have a reasonable basis for believing they are competent and have no reason to doubt that the work is credible. So, clearly there may be some added risk to using contributing appraisers who are not willing to sign the complete report. Yet, if the contributing appraisers are far more knowledgeable and experienced in specific areas, it in fact might be compelling if not even mandatory, to seek their outside help.

The client may have additional requirements for certification, that requires contributing appraisers to sign some kind of certification that pertains only to their actual contribution and does or does not require them to approve the entire report. USPAP Standard 2-3 (d) seems to handle this, with the indication that a second supplemental certification be added to the report.

So, in conclusion, this is what I could recommend:

1. Contributing appraisers can be given the option to sign-off on the entire report. That would mean that they must keep copies of the report and workfile per USPAP.

2. Or, the signing appraiser can include a supplemental certification in the report that identifies contributing appraisers and their contribution. Further, there is nothing to prevent contractual obligations between the signing and contributing appraiser that go beyond USPAP. For example, contributing appraisers could agree to support their contribution in court should there be legal issues. Limitations on liability expressed by contributing appraisers would likely have to be transferred to the client by the signing appraiser. In the letter of engagement, you might find words similar to: “The development of the statistical model was done by Mr. John Doe, and should any liability issues arise related to the development of the statistical model, our liability in respect to this specific analysis and the decision to employ Mr. John Doe, is constrained by contractual limitations with Mr. John Doe, who has a per instance liability limitation of $10,000.” Please note that the actual wording would have to be checked with a reputable real estate attorney.

3. There are two terms an interesting term that has popped up in my research:

a. Non-Dissenting Collaborating Appraiser

b. Dissenting Collaborating Appraiser

So, it appears that a contributing appraiser is allowed to disagree with the final conclusions of the report; and thus would certainly not sign it. But the point is, this seems like good terminology and underscores the fact that a contributing appraiser does not necessarily agree with other aspects of the report, over which he or she has no control.

Thus, it appears that from the perspective of USPAP, there is nothing in the way to prevent appraisers from relying on contributions from other appraisers, so long as they have reasonable basis to believe they are competent.

However, the idea of small independent appraisers collaborating in networks to compete with large companies, should strike fear in the hearts of larger companies. Having worked in such a large company, I would venture to guess that with time, peer-to-peer networks of independent appraisers would out-compete larger companies with higher quality contributing appraisers and without the inefficiencies for bureaucratic organizations. However, at the same time, large companies often engage in outsourcing, so such collaboration might benefit them as well.

The next issue that must be dealt with is communication. An easy to use secure network must be set up that will allow information to be easily exchanged between collaborating appraisers. I have set up such networks and believe that RabbitMQ provides the best solution.

Here is a diagrammatic overview of the process:


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