The reconsideration of value is a formal process.  In the Fannie Mae Selling Guide are the guidelines that allows a lender or borrower to request a review of an appraisal when relevant new information may affect the value opinion. This isn’t about disagreeing with the appraiser’s judgment.  It’s about presenting factual, material data—such as overlooked property features or newly closed comparable sales—that may not have been available during the original analysis. The appraiser then reviews this information and determines whether it justifies any change to the original value.

A reconsideration of value must be supported by specific, verifiable market data.  It cannot be based on mere dissatisfaction with the appraised value. The appraiser’s role is to assess the credibility and relevance of the submitted information. If the new data is meaningful and meets professional standards, the appraiser may issue a revised report. However, if the appraiser finds the information immaterial or redundant, the original value opinion stands.  This reinforces the objectivity and independence of the appraisal process.

The reconsideration of value request typically must be submitted within 30 days of the appraisal’s delivery.  Only the borrower can initiate it. Appraisers are prohibited from making changes based solely on client preferences or pressure. The process safeguards the reliability of valuation in mortgage lending.  It also offers a mechanism to correct genuine oversights. When properly handled, it ensures fair and accurate appraisals without compromising professional ethics or regulatory compliance.

And don’t forget to keep your E&O Insurance up to date and a great administrative law attorney on  your side!

USPAP, SR1-6, and Reconciliation are central to producing a credible opinion of value in any real estate appraisal report. The 2024 Uniform Standards of Professional Appraisal Practice (USPAP) emphasizes that reconciliation is not just a procedural formality—it is an essential component of value development. According to USPAP’s Standard Rule 1-6(a), appraisers must reconcile the quality and quantity of the data analyzed within each valuation approach. This rule underscores the importance of critical thinking and professional judgment in ensuring the appraisal is not merely mechanical, but rooted in logic, accuracy, and market relevance.

USPAP, SR1-6, and Reconciliation also require clear communication and transparency in every USPAP-compliant appraisal. Under SR1-6(b), appraisers must reconcile the applicability and relevance of each method and technique used to arrive at the final value conclusion. This means explaining why one approach—such as the sales comparison, cost, or income approach—was given greater weight over others. For clients, lenders, and legal professionals reviewing the appraisal report, this level of clarity enhances trust, supports regulatory compliance, and upholds the ethical standards of the profession.

USPAP, SR1-6, and Reconciliation ensure that an appraiser’s conclusion is both defensible and reliable. Proper reconciliation weaves together all relevant market data, analysis techniques, and scope of work into a unified, well-reasoned value opinion. In a world increasingly driven by data and regulation, credible appraisal report reconciliation stands as a hallmark of professional excellence and client confidence in real estate valuation.

No matter what, make sure your E&O is up to date and you have great administrative law attorney on your side.

DOES REAL ESTATE APPRAISAL HAVE A FUTURE?

Does real estate appraisal have a future?  This question comes in to me all the time.  And it’s important! We’ve invested a lot of time and money to become appraisers.  Did we waste all that?  There are some who say yes to that question.  Generally, they point out the changes that are coming to real estate appraisal (or have come).  Then they point out the sacrifices to keep up with these changes are just too big.  Those changes are coming at us just too fast.  The learning curve is just too long.  These appraisers should transition out of the business

So, does real estate appraisal have a future?  Of course it does.  It will be different than it is now, though.  Because UAD 3.6 demands greater reporting, it also demands more thorough appraisals.  More attention to details.  Less boilerplate.  Fewer unsupported assumptions about adjustments, market trends, and effective age.  Yet the professional education and training behind those demands will make those who stay in the business better appraisers.  How is that a bad thing?  It is also likely appraisers will need to make some transitions.  This means transitions to commercial work, non-lender work, court work, divorce work, tax appeal work, etc.

Yes, all things considered, real estate appraisal has a future.  But the hallmark of that future is one of change.  Is what you read on the appraiser-oriented websites, etc. accurate?  If it is, then within 24-months of this podcast, there likely will be fifteen percent fewer appraisers than there are now.  There likely will be fewer folks getting into the business.  And those who stay are likely to be better trained.  Why?  Because the cookie-cutter house in the cookie-cutter subdivision will be an assignment of the past.  Make sure you have proper E&O insurance and proper legal counsel.  Those requirements will not change.

USPAP, Verification, and Bernoulli’s Fallacy.  That’s a mouthful!  What does it mean?  I’m assuming  you’ve heard of USPAP.  Verification is an important component of USPAP’s SR1-4 (learn it, love it, use it).  But it is likely Bernoulli’s Fallacy is something you don’t know about.  Yet.  You will, though.  It is going to become really important in residential real estate appraisal, especially when UAD3.6 takes effect in November of 2026.  Read on to learn why.

Really USPAP, verification and Bernoulli’s Fallacy go together.  USPAP’s Standards Rule 1-4 requires us appraisers to “…collect, verify, and analyze all information necessary for credible assignment results.”  As with a lot of USPAP, this is not overly clear (hello, ASB!).  Bernoulli’s Fallacy says, in so many words, in statistical inference, people often wrongly assume that a single event, or a small number of observations, directly reveals the underlying probability of a process.  We see this all the time from clients.  Most houses in a subdivision sell for between $300K and $350K.  Yet the one with the premium view and the kitchen upgrades that sold for $393K gets all their attention.  If the subject is your basic house in the neighborhood, then its value is somewhere between $300K and $350K, that one outlier notwithstanding.  One outlier’s price does not predict market value, despite what the client demands.

USPAP, verification, and Bernoulli’s Fallacy are a package deal.  USPAP demands verification and we avoid Bernoulli’s Fallacy by being very skeptical about the predictive value of one or two outliers.  This will become even more important as UAD3.6 kicks in and appraisers will need to write more in their appraisal reports.  Are you preparing for that?

Questions?  Contact me at [email protected].   Need legal help or information on E&O insurance.  I can help you with those, too.

USPAP and choosing comps is likely a poor name for this podcast.  It’s a poor name since USPAP’s Standard One is silent on the choice of choosing comparable sales.   In fact, all Standard One (see SR1-4(a)) says about the sales comparison approach consists of twenty-seven words.  None of them is the word comparable, nor the words comparable sales.  So, no, Standard One in USPAP is not a reliable source relative to choosing comparable sales.

However, USPAP and choosing comps in made easier in the context of the Comment to SR1-3(b).  This is USPAP’s Market Analysis and Highest and Best Use Standards Rule.  In that Comment is the admonition the appraiser “…must analyze the relevant legal, physical, and economic factors to the extent necessary for credible assignment results.”  So, if there is a model for choosing a comparable sale, it is that such a sale must have the same relevant legal, physical, and economic characteristics as the subject.  In turn, this means appraisers must understand the subject’s legal, physical, and economic factors before it is possible to understand those of competing sales, thus before it is possible to choose comps.

So, since USPAP and choosing comps seems to be an incompatible pairing, is there another model to use as part of the process of choosing comparable sales?  Indirectly, yes, there is.  One of the difficulties we face in this task is that there is no formal definition of a comparable sale.  There are merely descriptions.  A careful reading of The 15th ed. of the Appraisal of Real Estate shows that a common description is that a comparable sale is one that has the same highest and best use as the subject.

And remember to have an experienced attorney on your speed-dial, and your E&O insurance up to date!

USPAP does not specifically use the term, “…from your workfile…”   However, you’ll find your state appraisal board does.  In fact, you’ll find the board uses this phrase a lost.  Given that, let’s spend some time on what the phrase means how we appraisers must comply with it.

“From your workfile” means just that.  Under USPAP’s Standard 1, the appraiser has the ethical obligation to have enough materials, data, analyses, and so forth to support everything.  In this instance, everything means every conclusion, statement of fact, opinion, etc.  A lot of appraisers ask why this is necessary.  To support everything from the data, analyses, and information in the workfile means the appraiser acted objectively.  Each opinion, conclusion, and so forth merits objective, market-based support.  If the market does not support a conclusion, if there is even a hint of subjectivity in a highest and best use or value opinion, then its credibility is fatally flawed.

What about phone messages?  How is it possible to get those from the workfile!  Simple.  When you verify a sale, take notes on that call.  Who?  What? Where? When? Why?  How?  When you have the answers to those questions, you are home free.  Brokers won’t return your phone calls?  Then send an email with this statement, “I know you are busy.  So, if you do not respond to this email, I’ll assume the facts of this transaction are as you noted them in the MLS.”  Then, make sure your workfile has a copy of the deed, mortgage, survey or plat, zoning classification and code, and everything else the County/Parish has on the subject.  This supports your objectivity.

And remember, make sure you have great E&O insurance on your side, as well as a great attorney.

USPAP doesn’t mention time adjustments.  They are not useless or unnecessary.  Measuring and analyzing changes in market conditions are critical and fundamental to real estate appraisal. Indeed, they are the foundation of an accurate opinion of value. This is simply because such a value conclusion has as its base a specific date in time.  This is the effective date of appraisal. So, from within the neighborhood boundaries appraisers delineate at the beginning of the appraisal report, they must analyze sufficient sales data.

To do what?   To determine if there have been any changes in market conditions over the passage of time. Typically, this time starts when the comparable goes under contract.  Then it ends on the effective date of the appraisal. Has the market has measurably changed over that period?  That change means the appraiser should market-adjust the comps up- or downward, as the market demands.

Again, USPAP doesn’t mention time adjustments.  But this raises the question of which time period should the appraiser measure? As you’ll understand from the podcast, the GSEs assume the appraiser will measure the subject’s relevant market(s) over at least twelve (12) months.  There is no black-and-white answer to the question, “How far back should I go for time adjustment data?” 12-months is a minimum, however.

Since USPAP doesn’t mention time adjustments, assume a twelve percent (12%) net increase over that one (-1-) year period.  Assume prices increased twelve percent (12%) from January to August but went flat as of September 1st.  If a comp went under contract September 14th, closed escrow November 27th, and the effective date of your appraisal is December 23rd, your time adjustment would be zero (-0-). The market went flat three (-3-) months ago. This is, therefore, the difference between the annual change per year and any current market trends.

A hill to die on.  That sounds way too serious for a real estate appraisal podcast, right?  These are supposed to be about USPAP, and education, and more practical stuff.  But I’ve been studying on this topic for some time.  Frankly, what AMCs do (or don’t do) does not bother me as much as it does some appraisers.  Those appraisers complain that AMCs do not distinguish between their gross fees and the proration of that fee that goes to the appraiser.  That’s true.  But when you buy a car, the dealer does not make transparent the contributory cost of the spark plugs and drive shaft, either.

And the fees the AMCs pay are not, in my opinion, a hill to die on, at least not right now.  That time is coming – soon.  So, unless the AMC withholds some pertinent information from the appraiser, or somehow misrepresents the situation, then the appraiser sets the fee by accepting it.  But there is a hill to die on when it comes to AMCs.  And that hill is USPAP, of which all AMCs, you’d think, would be aware.  But while the GSEs are pushing appraisal waivers, it also seems AMCs are stressing appraisers to accept lower fees for the same quantity of work, all to sustain the AMCs’ fee structure.  Remember, the AMC can ask the appraiser anything it wants to ask.  If, however, that request includes a knowledgeable request to violate USPAP, then it is time the appraiser should fire that AMC and get a new client.

Today, right now, get out of AMC work and into private work.  I’ll be happy to consult with you on that.  And make sure your E&O insurance is as relevant as possible.  It will help to have expert legal counsel in your phone’s directory, too!

To comply with USPAP can be such a pain in the neck!  For example, take what’s happening now.  In the past, a commission was a commission and nobody gave any thought to it.  But now, it might be nothing we appraisers should worry about, but it also might be a sales concession.  If the commission inflates the purchase price over what it would have been otherwise, we appraisers have to account for that.  And that requires cash-equivalency adjustments.  And those are such a pain in the neck!

To comply with USPAP can be such a bother!  Then there are mortgage buy-downs.  Let’s face it, mortgage interest rates are high and will likely remain  high for the foreseeable future.  So, if a seller offers the buyer a buy-down from seven percent to five percent, what buyer is going to be dumb enough to say no to that?  But, yet, we appraisers must look at that as a financing concession.  And when it comes to financing concessions, we have to perform the cash equivalency calculations.  USPAP demands we do them.  The GSE’s definition of market value demands we do them.  And, of course, every buyer wants to know they overpaid for their property, right?

To comply with USPAP can be such an inconvenience.  For example, we appraisers are supposed to verify our sales, cost, and rental data.  Yet for the lousy fees the AMCs are willing to pay, we don’t make enough money to verify data with the buyer, the seller, the broker, the builder, and so forth.  Yet, when we sign that Certification, we certify to the client we complied with USPAP.  Did we?  If you certify that you did, but you really did not, then you are going to need great legal counsel and comprehensive E&O insurance.  Contact me:  [email protected].

There’s too much going on in AppraisalWorld.  It is essentially impossible to keep track of what’s going on.  FHFA just announced, in the most neutral of tones, that appraisal waivers could now be had, under certain conditions unheard of before.  Again, conditions apply, but waivers are going to be available up to a 90% loan-to-value ratio (and 97% with a property data collection requirement).  One of the conditions that applies is that the borrower would have to possess a killer FICO score.  But that condition is current at the end of 2024.  Given current political and social forces, who knows what those will be six-, twelve-, and eighteen-months from now?  If real estate appraisal is the adult supervision of the mortgage lending industry, it appears that industry has found a way to remove the adult’s influence.

And, there’s too much going on in other areas, too.  Fannie Mae is still sending letters to state appraisal boards about time and GLA adjustments.  Certain states that do not accept anonymous complaints just trash them as a matter of course.  Other states that accept such complaints insert those letters way at the bottom of their to do list.  This may help the state with its administrative work load.  But it does not help the appraiser to sleep well at night as this hangs over the appraiser’s head, family, and business.

And speaking about there is too much going on.  There are now grumblings that USPAP needs to replace the ambiguous word credible (credible to whom and how to measure it?) with the word reliable.   This is especially true now that the ROV process assumes the borrower is an intended user of the appraisal report.

So, what to do?  Consider making friends with an administrative law attorney in each state in which you have a credential.  And please make sure you have proper E&O insurance coverage.