By Dennis A. Scardilli, Esq., MAI; Stephen D. Roach, MAI, SRA, AI-GRS; & Leslie P. Sellers, MAI, SRA, AI-GRS
RMAT? Huh? What’s a RMAT? It is USPAP’s referenced “Recognized Methods and Techniques of Real Estate Appraisal.” So, humor us as we explain the connection between RMATs and the Appraisal Institute’s Body of Knowledge.
Everyone who says they don’t understand USPAP, raise your hand (figuratively, of course). Now, everyone who has at least cracked open the AI’s authoritative publications, such as “The Appraisal of Real Estate, 14th Edition,” put your hand down.
Whew! Hardly any hands left up. Why?
Because what did we all learn as “baby appraisers?” We learned the theory and techniques developed by the Appraisal Institute since 1932. And, no, you didn’t need to have taken your first course with AI, but we hope you did. The AI theory and techniques are the worldwide basis for valuation practice.
The Appraisal Institute’s Body of Knowledge is the substance underlying USPAP’s referenced “Recognized Methods and Techniques of Real Estate Appraisal.”
USPAP 2018-19 mentions “Recognized Methods and Techniques of Real Estate Appraisal” 18 times, typically reiterating SR 1-1(a): “be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal”. But, USPAP does not define “Recognized Methods and Techniques of Real Estate Appraisal,” nor does it tell us where to find them.
We all know the story. Long ago and far away, appraisal industry leadership created USPAP from their own organizational standards. At that time, the Appraisal Institute had a leading role in the creation of USPAP. So, it makes sense that the underlying substantive rationale for appraisal standards can be found in AI’s Body of Knowledge.
So, you ask, ”What is the Appraisal Institute’s Body of Knowledge?” In February 2018, AI’s Board of Directors passed a resolution stating it consisted of the following:
- AI’s currently available textbooks, monographs and Guide Notes, excluding compilations of articles;
- current national AI courses and seminars;
- and that AI’s Body of Knowledge was an authoritative source of recognized methods and techniques for valuation practitioners.
Numerous courts have recognized publications in the Appraisal Institute’s Body of Knowledge as a “learned treatise” worthy of ”judicial notice.” Most jurisdictions accept the “learned treatise rule,” which is defined as “an exception to the hearsay rule [in Evidence] by which a published text may be established as authoritative either by expert testimony or by judicial notice” by “Black’s Law Dictionary, 8th Edition” (West, 2004) at 907. Judicial notice is defined as “A court’s acceptance, for purposes of convenience and without requiring a party’s proof of a well-known and indisputable fact; the court’s power to accept such a fact” by Black’s at 865.
The Appraisal Institute’s Body of Knowledge in its various components have been recognized by courts as an authoritative source of RMATs. Perhaps the most prolific example is the widespread acceptance of “The Appraisal of Real Estate.”
You know what happens in litigation. You say, “My appraisal is based on USPAP.” The appraiser on the other side says, “My appraisal is based on USPAP.” That gets you into a “Battle of the Experts.”
But it’s not so cool in a regulatory matter, where you are the defendant, and the Appellate Court effectively accepts unchallenged, and even unsupported decisions of a regulatory board.
What does that mean? It means that if you are a defendant in an appraiser regulatory proceeding, be prepared to pony up beaucoup dollars for the best expert you can afford. And be prepared for a very expensive ‘Battle of the Experts.” On the other hand, if (today) you are on the side of the prosecution in an appraiser regulatory proceeding, you need to do more than to say that you “understand” USPAP.
So, whether you are working on hourly billings in a litigation matter, or you are on either side of an appraiser regulatory proceeding, you need to understand the Appraisal Institute’s Body of Knowledge as the foundation for the RMATs in USPAP.
This also goes for appraisers who only perform lending appraisals. How many times has a reviewer said, “Your original appraisal is wrong because I’m basing my review on USPAP?” If you’re the original appraiser, you want to hit them over the head (figuratively, of course) with AI’s Body of Knowledge. If you’re the review appraiser, you will want to use it as your shield when the original appraiser tries to hit you over the head.
No matter your role in the appraisal process, you can either cross your fingers, pray, or do whatever else works for you. Or, you can get with it and build your substantive practice theory and procedures on the Appraisal Institute’s Body of Knowledge.
Dennis A. Scardilli, Esq., MAI, is an appraiser defense attorney. Stephen D. Roach, MAI, SRA, AI-GRS, is chair of the Appraisal Institute’s Education Committee. Leslie P. Sellers, MAI, SRA, AI-GRS, is chair of the Appraisal Institute’s Body of Knowledge Committee.
See the description for this session, and others, that will be presented at the Appraisal Institute’s 2019 Annual Conference in Denver.