March 23, 2020
Update: Monday, March 23rd, 2020
Thank you for being a loyal ALIA customer. The Coronavirus pandemic is uncharted territory for our communities, the economy, and the real estate marketplace in particular. The future will be challenging for the entire country, but ALIA is here for you. Our business already practices workplace flexibility, so we expect no disruption to the service levels you currently experience.
Many real estate professionals are approaching this situation by asking questions: How do I handle a gap in income? Can I continue to afford my insurance? How do I best position my company for when business rebounds? These are terrific questions, and we are available to discuss them with you.
Finally, if you are under a “Shelter in Place” order like many areas, this is an excellent time to complete some Continuing Education credits, so your requirements are out of the way when the market recovers.
Our team will send out weekly emails to proactively address some of the common questions we are fielding as well as highlight some online CE courses you may find interesting.
You can reach us through our Hotline at (1-800-882-4410 x6)
Disclosure wording in Appraisal Reports
One of the most common questions we are fielding relates to disclosure wording in Appraisal Reports for current conditions. We believe looking first at guidelines offered by national professional organizations is the best way to remain in-line with standard of care for the profession. Accordingly, we identified the following alert posted by the American Society of Appraisers on Friday, March 20, 2020. We believe this article adeptly summarizes three key issues facing appraisers today: 1) Keeping yourself and others safe, 2) Future market Conditions, and 3) Exterior Only Appraisals.
We will continue to monitor other National and Professional sources for relevant posts and link them to the Resource Center. If any of you see other articles or announcements, please respond to this email with a link to the article. We will circulate it among our 3,000 nationwide customers to help spread the word.
Thank you, and please contact us directly for any questions or suggestions.
Quoted from Appraisers.Org website:
The Coronavirus or Covid-19 is impacting our daily lives in an unprecedented fashion with declared states of emergency and with officials advising people to avoid each other whenever possible. As appraisers we are expected to go into homes and businesses in order to complete our assignments. While in many ways the risk from the flu virus is greater, we need to respect the concerns of those we come into contact with. For that reason, we offer the following suggestions.
- Talk with your clients about Covid-19 to see if they have any protocols they would like you to follow.
- Let your clients know you will have a conversation with the borrower/owner when scheduling the appointment to identify any risk of infection. This conversation should also provide the borrower/owner with the opportunity to ask you screening questions or to assure them you are not ill.
- The appointment scheduling call is a good time to let the borrower/owner know if you will be wearing gloves, not shaking hands, etc.
- Screening should be limited to questions about the Coronavirus and flu such as:
- Is anyone in your household currently sick with a fever and/or a cough?
- Has anyone in your household been exposed to a person who has or is suspected of having the Coronavirus?
- If the appointment is set for a few days later, you may wish to ask again when you arrive at the property.
- Communication is key – between you, your client, and the people you will come into contact with — to avoid misunderstandings.
Learn more about recent ASB issued Q&A for interior inspections, and flexibility provided to appraisers.
Future Market Conditions
Additionally, the MBREA recommends that appraisers address future market conditions in their reports. President, Michael Nicora, RA, in a March 19, 2020 COVID-19 e-mail update, cited lessons learned in 2008 where appraisers were frequently held accountable for losses incurred by lenders and the GSEs when the recession struck. Nicora provided the sample below developed by MBREA for appraisers to use. He also encouraged appraisers to seek the advice of their attorney.
“Statement Relative to the Coronavirus (COVID-19) COVID-19 has been declared a pandemic and a national state of emergency in place. Substantial turmoil has occurred in financial markets and due to the developing situation, it is not possible at this time to quantify its long-term or short-term effects on real estate markets or on the subject property. The value opinion contained in this appraisal is based on findings of an analysis of market data available to the appraiser at the time of the assignment.” – Source MBREA
Lastly, the MBREA recommends that appraisers also include an extraordinary assumption in reports. As noted by Nicora, the use of such is permissible contingent on a reasonable basis and credible analysis results per USPAP Q&A. Nicora provided the sample below developed by MBREA for appraisers to use. He also encouraged appraisers to fully document the basis for use in their report and workfile.
“Extraordinary Assumption – Interior Inspection of the Property Due to the COVID-19 virus, an interior inspection has not been made. The appraiser’s personal inspection consists of viewing the subject from the street frontage. Information on relevant physical characteristics has been obtained from sources specified in the appraisal’s scope of work. If the information obtained from these sources is incorrect, the assignment results of this appraisal could be affected. ” – Source MBREA
Link to Appraisers.org Article here: https://www.appraisers.org/asa-newsroom/article/2020/03/20/covid-19-assignment-protocols-and-report-recommendations-for-appraisers