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Appraisal Foundation in Dispute with Appraisal Institute

Word has been spreading around the campfire for some time about a dispute between the Appraisal Institute (AI) and the Appraisal Foundation.  The dispute came to a head on June 15, 2010, when the Appraisal Foundation held a special meeting of its Executive Committee in Chicago, IL, to consider conduct by AI detrimental to the Foundation.

According to the Foundation, the meeting was held to “consider evidence concerning conduct by the Appraisal Institute that might be viewed as materially and seriously prejudicial to the Foundation and that could result in the possible suspension, expulsion or other sanctioning of the Appraisal Institute.”

After the June 15th meeting, AI President Leslie Sellers wrote a letter to colleagues explaining the AI position.  Mr. Sellers stated that the issue was a discussion possible legislative language that was ultimately rejected by the AI Board of Directors.

The Foundation responded to AI on June 23, 2010, stating that dispute was focused on more than conversation.  While noting several inaccuracies in the AI letter, Foundation Chair, David C. Wilkes, said there is evidence that AI crafted legislation that would harm the Foundation and sought support for the legislation from other Sponsors of the Foundation.

As of today, the Foundation remains in Executive Session so they are still deliberating.  To enjoy the full tit-for-tat read both letters here and stay tuned for more summer fun.

Comments
  1. Justin Morton

    To quote a great American pioneer, “Can’t we all… just… get along?” :)

  2. Dave

    The Appraisal Institute leadership needs to be put in their place. Their classroom fees are excessive and their designation is cost to much. I hope they are removed from the Foundation

  3. Rich

    This article made the issue clear as thick mud. What is the issue? When was it brought up? What are the proposed resolves?

    This was not even worth the time to read it. And how in the world do we know which side to take when we have no idea what the problem is?

    ie: If the issue is the Foundation wants BPOs to be treated as appraisals then the AI is correct, they should not. On the other hand if the AI wants appraisers to have 30 yrs experience and a PHD before they can be Certified or Licensed to perform unsupervised appraisals then they are full of crap. But who really knows what the issue is from this article?

    This left WAY more questions than answers……actually…..NO answers.

    Here are a couple more questions:
    Does the author of this article still have a job? If so….why?

  4. Appraiser

    The Appraisal Institue has one agenda — and that is to grow the membership of the Institute any any cost. This “at any cost” approach is linked to legislation against any appraiser not in their group. In the past several years I have never seen a stance by the Institute that didnt in some way slam the very group they claim to represent. Tougher restriction on appraisers appears to be their biggest goal — and the end game is having all appraisers in their group. They slam appraisers that work for AMC’s and say they are less of an appraiser than what is found within their ranks — however their ranks can be found in the main offices of nearly every AMC in the country. I will never join this group and urge other appraisers to understand what their agenda really is. Yes, the publications represent a great resource — but there again, if you want to sell books — sell books and stop working against the appraisal industry and its appraisers.

  5. Frank

    Thank you Rich and Appraiser.
    I agree the issues couldn’t be less clear and am very wary of the Institute’s motivations in all they do. I am one of the ones they consider less than equal because I have to work with amc’s. How about some more brief detail on the issues?

  6. Retired Appraiser

    Not sure I would agree with the previous comment about the AI being AMC unfriendly. The AI supports HVCC (or at least they have 3 or 4 times over the past 15 months). Not sure if they support appraisers or AMCs this month…I stopped checking into it after they flip flopped the 3rd or 4th time.

    They love you
    They love you not
    They love you
    They hate you
    …to be continued.

  7. The AI doesn’t hate appraisers who work with AMC’s. That has never been expressed publicly or privately by AI leadership or by any rank and file member I am familiar with. The AI does not have an agenda to grow it at any cost. If that was the case requirements for membership as an Associate or designated member would be lesser and fewer and fees would be reduced. Membership in AI is totally optional and not mandatory. If you don’t want to belong, so be it. That is your choice and no one in AI leadership thinks ill of you for not being a member. If you find the barriers to entry to onerous to overcome then simply don’t join. No big deal. If the education fees are too high for you, don’t take their courses. No one is mandating that you take them. No foul. If you want to whine over a perceived wrong or injustice, so be it. Whining and complaining and criticizing are acceptable expressions of your First Amendment rights. The AI does support HVCC, it supports professionalism, global standards and maintaining the public trust. I too agree that the author of the article did not articulate the issues at the core of the dispute. A further report, in detail, on the matter is needed.

  8. Henry Harmon

    Don’t believe everything you read critical of the Appraisal Institute. It has done nothing but work at improving the profession since 1932, 78 years. It is responsible for providing the best education and publications related to everything appraisal. Its designations are respected by lending institutions, transportation agencies, and the courts. The MAI and SRA designations are not difficult to attain; one must pass several courses, submit a demonstraion report or its equivalent, and pass a rigorous examination. Finally, one must attain experience, and most of all, have a strong ethical character. The reqirements are those of a profession, not just a trade.
    If one reads between the lines, you’ll see a strong Foundation jealousy of the Appraisal Institute. Finally, it is apparant that the Foundation has partnered with RICS to be global. It is interesting that the Foundation officers recently were “given” Rics designations and are traveling aroiund the world together at various functions.

    The AI is being accused of something they didn’t do.

    Like I said, don’t believe everything you hear or read. There’s more to this than meets the eye.

  9. Clint

    I agree with ‘Retired Appraiser’. I am a member of the AI but have been confused over their apparent support of the HVCC. They should have rejected the notion that Certified appraisers required policing by AMCs to ensure their objectivity. Rather, there should have been an all out effort to on the part of the Appraisal Institute to persuade Fannie and Freddie of appraisers’ professionalism and focus the AI’s efforts on scouring their own membership of those appraisers who compromised their integrity.

  10. Laura

    Chicago, Il again? More Chicago politics?

  11. Lisa

    I don’t know about anyone else, but I am getting tired of the constant rhetoric between appraisers. We fight so many battles on so many fronts, its time we start working together. United we stand, divided we fall.

  12. LV Appraiser

    I am wondering why there is virtually NO information out there as to the conflict between the AI and the AF. When there is not “openess”, one wonders what is going on behind closed doors. This is not a private matter, it should be out in the open.

    If the AI is being accused of something they did not do, why are they hiding info about it? VERY SUSPICIOUS…

    I also believe that the AI is not out to further professionalism of the Appraisal Industry as a whole, but only those that are in their ranks.

    Once licensing hit, they became a book vendor and education supplier. They do both of those well, but that is about it!

  13. TedC

    AI members. How does it feel now that your President and institute has been caught in lying and subversive activities determental to the appraisal profession? Still have undying allegiance to these subversives? You should join the Appraisal Foundation as a member if you can. They are obviously the only ones that can tell the truth. It appears the AI kool-aid has gone bad.

  14. Don’t you see what is going on? AI and AF are jockying for position of power now that Wall Street has crashed. They are both wanting to call the shots.

    If these groups have been lobbying for me, I wish they would stop. The net result of their efforts have caused laws to be passed that require doulbe the hours for licensure as compared to before 2008. And now the lion’s share of all appraisal assignments are being doled out by AMC’s (some owned by large banks) that have nothing invested in the appraisal, no liability, but are paying themselves 50% or more of our old outdated fee schedule and cutting the appraiser’s fees to less than $300.

    I received an email inquiry this a.m. from an AMC requesting that I research a property in a million dollar market and offered $275 fee for a completed report. I did a cursory review of the subject and its neighborhood and replied to the AMC that due to the complexity, distance, and lack of similar available comparables to the subject, I would perform the assignment for $1,250, please send payment with the assignment order. They did not respond.

    Independent fee appraisers analyze and produce quality reports on properties that sometimes involved huge amounts of money, yet, lack the courage or organizational ability to charge fees that reflect proper compensation for their efforts.

    When houses were selling for $50,000, the appraisal fee was around $250. When the same houses were selling for $500,000 or more, those appraisal fees were around $350-400. The realtors were splitting 6% of the subject’s value. Appraisal fees did not keep pace with costs. Now appraisers are required by law to complete double the classroom hours for any license and pass another 56 hours of continuing education and USPAP courses every 2 years. Do you think AI had anything to do with that law?

    Let’s start another national group. Let’s call it Patriot Appraisers or National Patriot Appraisers (these name may already be in use). Send me a few million dollars to lobby in Washington and I will see that some real changes are made to the way appraisers are treated in regards to real estate transactions and that they will be properly compensated for their efforts.

    My initial proposal would be payment upfront. If clients contact an appraiser for a possible assignment, the client should send $250 with the inquiry, so that the appraiser can do a meaningful research of his or her data bases. Then the appraiser would send a bid for a complete appraisal of that particular assignment based upon real research and discovery instead of his last memory of the neighborhood or a cursory querey on the public records and MLS. If the fee is accepte, payment should be made before the appraisal report is shipped.

    When the appraiser is offered “payment at closing” he automatically has an implied interest in the transaction. All that format does is save the client from out of pocket cost before loan closing. It costs the appraiser interest on his time and efforts and influences his judgement as to the true Fair Market Value of the subject. And if it does not close? Yes, I go to small claims court and pay $40 to the county, after sending several certified letters ($2.00 each) to the client. Gee, what a sorry system.

    Let’s band together and turn this business around while congress is writing a new real estate bible. History has proven that sometimes something good comes from chaos. And if the present state of affairs for real estate is not chaos, someone has invented a new definition for it.

  15. David

    Follow the money trail. If the Foundation is allowed to offer classes, AI will lose a huge source of revenue and will eventually become completely irrelevant. This is a high level political squabble and a huge power-grab by a government-affiliated organization. Fellow appraisers, don’t be foolish. Please do not allow the Foundation to supply appraisal classes. AI took this stance against the Foundation, and this is why they are being whacked. It is self-preservation. Other appraisal organizations and private course-providers will also be injured if the Foundation is allowed to have its way. Even if you dislike the AI for other reasojns, we should stand with them on this point. Read the charges against the AI and check their substance. You will see that the Foundation’s complaint is not procedural as they allege. Rather, it is substantive. The Foundation is not mad that the AI failed to follow protocol. The Foundation is upset because the AI attempted to prevent the Foundation from grabbing more industry control. Control of course requirements, control of providing classes, and control of our education dollars. Follow the money trail. Industry profits from appraisal education classes are HUGE. When you can control the requirements AND the classes, you are the BIG DOG. Too much power for one organization. The AI is one of the biggest non-government players now, and there are MANY other small players at the moment. If the Foundation wins this skirmish, most small providers will be finished and the AI will eventually be only a small player primarily servicing their small loyal band of followers/members. All appraisers will be worse off. Don’t let it happpen. The recent expulsion is intended to soften up the opposition. The Foundation will eventually win this battle if we look the other way. Be smart. Don’t let it happen.

  16. Hello All,

    You know what is silly about members who are not designated and members of AI? Cutting their right and left arms off! AI for years tried to pass legislation stating appraisers to be designated to do complex valuation. USPAP does not have “Complex Valuation” in dictionary terms. AI was successful this time in the FRB now law. Changing FIRREA and allowing designations. It was kept out in the past so companies did not discriminate. Now the toned down version of AI’s designations is law. “Consider” for now is the key word. In the future it will be something else. Good grief AI members this does not look like membership first? Nothing is keeping any one from requiring designations.

  17. Lisa

    Eric-please check your continuing membership requirements for AI–then start coughing up those green things–they have $$$$$$$$. Yes, members are REQUIRED to take AI courses. I wouldn’t have joined but that was a REQUIREMENT of my mentor so he could run for local AI Board positions. I am also a member of the local Realtor Association so he can run for their boards. Everyone has an angle and at least five sticky fingers in your pocket. And WE have to take the ethics courses…hmmmm

  18. Paul

    David on 8/23 summarized it perfectly.
    Update: AI has resigned from the Foundation. What’s next?

  19. Jan

    I just wish you would stop fighting with each other and talk to congress. They are trying to change the way property is valued and purchased and we need to keep our eyes on the right ball…

    You have a chance to make things better – who cares who does it.

  20. ASA and not AI by choice

    Manipulation by either of these groups in a clash-of-the-titans fight is a negative for us. I have seen AI be responsive to the ‘market’ by putting on classes funded and taught by the solar industry with the intent that we would value property with solar at a premium. Why? Because they say so. So we pay for a ‘commercial’ propagandizing us and AI supports that because they’re being lobbied.

    We need to stand up as a group and take back our profession. AI and AF have become like the unions: self-aggrandizing groups that dictate policy for everyone, AI member or not.

  21. Karl

    I’m very new to the whole appraisal business and I am very confused with what any of this means to me. I am a member of AI (which i joined mainly to receive a discount on classes) and my mentor told me they provide the best education. What are the actual or possible effects of this split? I’ve read all your comments and as many articles as I can and I just can’t figure out why any of this is important…

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