Selling Guide

Published September 4, 2018

B4-1.1-04: Unacceptable Appraisal Practices (04/15/2014)

This topic contains examples of unacceptable practices, many of which are reflected in the appraiser’s certifications on the appraisal reports.

Unacceptable Appraisal Practices

The following are examples of unacceptable appraisal practices:

  • development of or reporting an opinion of market value that is not supportable by market data or is misleading;

  • development of a valuation conclusion based either partially or completely on the sex, race, color, religion, handicap, national origin, familial status, or other protected classes of either the prospective owners or occupants of the subject property or the present owners or occupants of the properties in the vicinity of the subject property;

  • development of a valuation conclusion based on factors that local, state, or federal law designate as discriminatory, and thus, prohibited;

  • misrepresentation of the physical characteristics of the subject property, improvements, or comparable sales;

  • failure to comment on negative factors with respect to the subject neighborhood, the subject property, or proximity of the subject property to adverse influences;

  • failure to adequately analyze and report any current contract of sale, option, offering, or listing of the subject property and the prior sales of the subject property and the comparable sales;

  • selection and use of inappropriate comparable sales;

  • failure to use comparable sales that are the most locationally and physically similar to the subject property;

  • creation of comparable sales by combining vacant land sales with the contract purchase price of a home that has been built or will be built on the land;

  • use of comparable sales in the valuation process when the appraiser has not personally inspected the exterior of the comparable property;

  • use of adjustments to comparable sales that do not reflect market reaction to the differences between the subject property and the comparable sales;

  • not supporting adjustments in the sales comparison approach;

  • failure to make adjustments when they are clearly indicated;

  • use of data, particularly comparable sales data, provided by parties that have a financial interest in the sale or in the financing of the subject property without the appraiser’s verification of the information from a disinterested source;

  • development of an appraisal or reporting an appraisal in a manner or direction that favors the cause of either the client or any related party, the amount of the opinion of value, the attainment of a specific result, or the occurrence of a subsequent event in order to receive compensation or employment for performing the appraisal or in anticipation of receiving future assignments; or

  • development of or reporting an appraisal in a manner that is inconsistent with the requirements of the USPAP in place as of the effective date of the appraisal.

Related Announcements

The table below provides references to the Announcements that have been issued that are related to this topic.

Announcements Issue Date
Announcement SEL-2014–03 April 15, 2014