I know it’s a challenging time for many of us, but please know the Appraisal Institute is closely monitoring the coronavirus situation and is looking out for the best interest of its professionals, customers and staff. Learn more below about that and other news from the past month.
Appraisal Institute Webinar Helps Appraisers Address Coronavirus Challenges
Here’s some information that can help your business during this crisis. The Appraisal Institute’s free 90-minute webinar covering the latest appraisal developments on the coronavirus (COVID-19) pandemic is now available on AI’s website and on its YouTube channel.
The webinar provided the most current legislative and regulatory developments that impact appraisers. Other content focused on fast-moving federal and state guidance issued for financial institutions and real estate professionals, in addition to professional practice guidance.
Moderated by Appraisal Institute 2020 President Jefferson L. Sherman, MAI, AI-GRS, the panelists were:
- Jim Murrett, MAI, SRA, chair, Professional Standards and Guidance Committee, Appraisal Institute;
- Stephanie Coleman, MAI, SRA, AI-GRS, AI-RRS, director of screening, Appraisal Institute;
- Doug Potts, MAI, AI-GRS, chair, Government Relations Committee, Appraisal Institute;
- Bill Garber, director of government and external relations, Appraisal Institute; and
- Scott Reuter, chief appraiser, director of valuation, single family, mortgage credit risk management, Freddie Mac.
The webinar (with video, slides and handouts) can be found on the Appraisal Institute’s coronavirus page. The webinar’s video also is posted on AI’s YouTube channel and on the bottom of the Appraisal Institute’s home page and on its website’s videos page.
AI Leads Way in Classifying Appraisers as Essential Workers
Like you, the Appraisal Institute believes appraisers provide an essential service. That’s why AI joined four other real estate organizations March 24 in asking state and local government leaders to include appraisers among “essential services” exempted from stay-at-home or shelter-in-place orders issued during the coronavirus pandemic.
The Appraisal Institute, the National Association of Realtors, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the Massachusetts Board of Real Estate Appraisers told the National Governors Association, the National Association of Counties, the U.S. Conference of Mayors and the National League of Cities in a letter: “We respectfully request that state and local governments minimize the potential interruptions to the real estate markets, and more specifically interruptions to the provision of appraisal services, by declaring real estate services as ‘essential services’ under any emergency powers declaration.”
Read more about the Appraisal Institute’s leadership on this important topic.
Fannie, Freddie Ease Appraisal Standards Due to COVID-19
As you may have seen in this week’s Appraiser News Online, the Federal Housing Finance Agency announced March 23 that Fannie Mae and Freddie Mac will ease standards for both property appraisals and employment verification in an effort to facilitate liquidity in the mortgage marketplace during the coronavirus outbreak. Specifically, the FHFA said appraisal alternatives will be used to prevent appraisers from having to inspect a home’s interior.
Director of Screening Offers Guidance for AI Professionals
Despite the unusual set of market conditions that appraisers are facing during the coronavirus pandemic, we still have the fundamental responsibility to account for market conditions on the effective date of value. Here’s some helpful guidance from Appraisal Institute Director of Screening Stephanie Coleman, MAI, SRA, AI-GRS, AI-RRS:
“Appraisers are concerned about being blamed for making the wrong calls on how COVID-19 might be affecting the market. That concern is understandable. But we need to remember what it is we do.
“We come up with not what we think the value of a property is, but what we think the market thinks it is. A ‘value’ is inherently an opinion. It’s not a fact to be uncovered. To figure out what ‘the market’s’ opinion of what a property is worth, we start with market analysis. Market analysis is a lot easier when market participants feel confident they know what’s happening. When there’s a great deal of uncertainty in the market, market participants become confused and figuring out what ‘typical, reasonable, knowledgeable’ buyers and sellers think and how they would react becomes complicated.
“The best we can do is talk to market participants – buyers, sellers, brokers. What’s happening with active escrows? Are buyers backing out? Are sellers holding off on listing properties? Reducing prices? Offering concessions? What’s happening with days on market? What are brokers hearing? Are tenants renewing leases? Are businesses closing and vacating? Are vacant spaces getting leased? Are developers going ahead with development plans, or have they put them on hold?
“The answers to these kinds of questions provide clues. The appraisal report should include a discussion of them as part of the market analysis.
“Finally, the appraisal report should address the uncertainty in the market caused by the COVID-19 crisis, not as a limiting condition, extraordinary assumption, or disclaimer, but rather as part of the discussion of market conditions. While the crisis is still unfolding, it might also be a good idea to highlight key points relating to COVID-19 as a significant factor in the letter of transmittal.”
2020 Annual Conference Registration Delayed, but Event Still Planned
I’m sure you’re wondering what the Appraisal Institute plans to do about its 2020 Annual Conference.
While we’ve delayed indefinitely the original March 25 date to open registration, the event is still scheduled to take place Aug. 3-5 in Orlando, Florida. The Appraisal Institute’s leadership continues to monitor the rapidly changing coronavirus situation’s effect and will provide further updates as decisions are made.
The valuation profession’s biggest event of the year will provide attendees the opportunity to meet real estate professionals from a wide variety of practices, enjoy the offsite opening night reception and attend the fun and casual closing night dinner. You’ll also be able to learn about exciting valuation topics from recognized experts, earn state and Appraisal Institute continuing education credit, and hear about the latest valuation products and services.
Learn more about the Appraisal Institute’s 2020 Annual Conference.
Appraisal Institute Opposes Biden’s Call for More Appraisal Standards
You’ll be glad to know that – in the midst of everything else going on – the Appraisal Institute continues to stand up for you and the rest of the real estate valuation profession. Responding to presidential candidate Joe Biden’s call to “establish a national standard for housing appraisals,” the Appraisal Institute said March 2 that a new standard is “unnecessary … because one already exists.”
The Appraisal Institute’s letter to Biden’s campaign agreed with his stated desire to end discriminatory and unfair practices in the housing market, and it noted that AI shares his expressed wish to tackle any racial bias that could lead to homes in communities of color potentially being appraised below their market value. But AI said that national appraisal standards and ethics requirements already require appraisers to perform their work with impartiality, objectivity and independence, without bias
Read more about AI’s letter.
New Webinar Series Provides Guidance for CRE Professionals
If you’re among the lending, credit, audit or risk management staff who order, review or use appraisal information, I encourage you to check out AI’s four-part webinar series for CRE lenders, “Appraisal Engagement, Appraisal Reviews and Evaluations:”
The webinar series helps ensure credit, underwriting and risk management staff can analyze an appraisal or evaluation. Get the details!
Other News Around the Appraisal Institute
And here’s some other important news from the Appraisal Institute:
- The Appraisal Institute continues to expand its social media activities. Be sure to follow AI on Facebook, Twitter, LinkedIn and YouTube.
In Closing
We definitely face many business uncertainties because of this most unusual medical/economic situation. However, it has been my observation of the severe economic downturns I’ve seen during my 36-year career as an appraiser that our high-quality services are needed then and now more than ever. We need to untangle this web of uncertainty for our clients. We can because we are trained to the highest level, have the best education and also have a tremendous bank of experience from which to draw our conclusions. We also have relationships with colleagues and can share thoughts with them. Please reread Stephanie Coleman’s advice above to all of us on how to conduct a market analysis under these conditions.
I also find it very interesting that many states are considering us as “essential” to the economy and are permitting us to work. We should all be smart about how we conduct inspections and to not put ourselves or occupants in danger. Work with your clients if you’re not already getting direction from them. They don’t want extra liability any more than you do. Depending on the intended use, you could suggest a reinspection at a later date to confirm your assumptions about the subject property. As noted above, the Appraisal Institute is working to extend the “essential” label throughout the United States.
We do have an essential role to play in keeping our economy stable, and we do provide our clients with the advice they need under such trying times. Never underestimate the “value” your service brings to our society.
Have a safe month!