The document defines key terms related to appraisals such as market value, price, and cost. It discusses the appraiser's role as a neutral third party providing objective opinions of value. It also summarizes major pieces of legislation that impacted appraisal practices, including FIRREA in response to the savings and loan crisis of the 1980s and the Dodd-Frank Act following the housing bubble and financial crisis of the late 2000s. Finally, it outlines the structure of appraiser regulation through professional associations, The Appraisal Foundation, the Appraisal Subcommittee, and state regulatory agencies that issue appraiser licenses.

1. Unit 1: The Appraisal Profession

2.  Definition of Appraisal
• Introduction
o “An appraisal is an act or process of developing an opinion
of value.” [USPAP 2012-2013].
o An appraiser is a person who is expected to value property
in a competent, objective, and impartial manner.
o An appraiser usually gives his or her opinion of value in a
written statement called an appraisal report.
o Collateral is property pledged to secure a loan.
o Retrospective appraisals are ones that look at the value of a
property at a point of time in the past.
o A prospective appraisal looks at the value of a property at a
future point in time.

3.  Definition of Appraisal (continued)
• Definition of Value
o Value is defined as the monetary worth of property, goods,
or services to buyers and sellers at a given time.
o The Appraisal Institute’s Dictionary of Real Estate Appraisal,
5th Edition defines market value as the “most probable price
that the specified property interest should sell for in a
competitive market after a reasonable exposure time, as of a
specified date, in cash, or in terms equivalent to cash, under
all conditions requisite to a fair sale, with the buyer and
seller each acting prudently, knowledgeably, for self-
interest, and assuming neither is under duress.”
o Price is the amount of money requested or paid for a
property.
o To an appraiser, cost is the amount of money it takes to
build a structure.

4.  Definition of Appraisal (continued)
• The Appraiser’s Role
o Third-party opinion is often needed to develop an
opinion of the market value of real property.
o The professional appraiser, because of training,
experience, and ethics, is responsible for giving clients
an objective opinion of value, reached without bias.
o The appraiser must remember to be a neutral party,
responding only to the forces affecting value and not
to people with special interests who might want to
influence his or her judgment.

5.  Financial Crises and Regulatory Reforms
• Savings & Loan Crisis of the Late 1980s – FIRREA
o The Savings and Loan Crisis (S&L Crisis) of the 1980s was a
wave of savings and loan failures caused by
mismanagement, failed speculation, and, in some cases,
fraud.
o The Tax Reform Act of 1986 also caused problems when it
changed the tax implications associated with many
investment properties.
o Financial Institutions Reform, Recovery, and Enforcement Act
of 1989
 As a response to the Savings & Loan crisis, Congress passed
the Financial Institutions Reform, Recovery, and Enforcement
Act (also known as FIRREA or the “S&L Bailout Bill”) in 1989.

6.  Financial Crises and Regulatory Reforms
(continued)
• Savings & Loan Crisis of the Late 1980s – FIRREA
o Financial Institutions Reform, Recovery, and
Enforcement Act of 1989
 A federally related transaction is any real estate-related
financial transaction which a federal financial institution’s
regulatory agency engages in, contracts for, or regulates,
and which requires the services of an appraiser.
 The transaction value is either the loan amount or the
market value of the property involved.

7.  Financial Crises and Regulatory Reforms
(continued)
• Housing Bubble and Financial Crisis of the late
2000s – Dodd-Frank Act
o Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010
 Made sweeping changes to financial regulatory agencies
and affects almost every aspect of the nation’s financial
services industry
 Creates new agencies and changes others, amends the
Federal Reserve Act, promotes transparency, and
establishes rigorous standards and supervision to protect
consumers, investors, and businesses

8.  Financial Crises and Regulatory Reforms
(continued)
• Housing Bubble and Financial Crisis of the late
2000s – Dodd-Frank Act
o Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010
 Subtitle F Provisions that Impact Appraisers
• Appraisal independence requirements
• Conflicts of interest defined and prohibited
• Mandatory reporting of appraisers who violate the Uniform
Standards of Professional Appraisal Practice (USPAP)
• Customary and reasonable appraisal fees
• Borrowers entitled to copies of all appraisals and valuations
• Sunset of the Home Valuation Code Of Conduct (HVCC)

9.  Appraiser Regulation
• Professional Associations
o Uniform Standards of Professional Appraisal Practice
(USPAP)
 Promote and maintain a high level of public trust and
confidence in professional appraisal practice
• The Appraisal Foundation
o The Appraiser Qualifications Board (AQB) is an
independent board of The Appraisal Foundation.
 Establishes the minimum education, experience, and
examination requirements an individual must meet in
order to become a state licensed or certified appraiser

10.  Appraiser Regulation (continued)
• The Appraisal Foundation
o The Appraisal Standards Board (ASB) is made up of six
appraisers who are appointed by TAF’s Board of
Trustees for three-year terms.
 Develops, interprets, and amends the Uniform Standards
of Professional Appraisal Practice (USPAP)
o The Appraisal Practices Board (APB) is composed of
five to seven members who can serve up to eight years
on the Board.
 Identifies and issues opinions on Recognized Valuation
Methods and Techniques, which may apply to all
disciplines within the appraisal profession

11.  Appraiser Regulation (continued)
• The Appraisal Foundation
o Appraisal Subcommittee
 FIRREA also established the Appraisal Subcommittee (ASC),
which maintains the official registry of state licensed and
certified appraisers, oversees the appraiser regulatory
programs established by the States, and monitors operations
of The Appraisal Foundation.
o State Agencies
 State agencies issue licenses or certifications based upon the
appraiser’s education, experience, and qualifications.
 License Classifications
• Appraiser Trainee Classification
• Residential Licensed Appraiser Classification
• Certified Residential Appraiser Classification
• Certified General Appraiser Classification

12.  Appraiser Regulation (continued)
• The Appraisal Foundation
o State Agencies
 License Classifications

13.  Appraiser Regulation (continued)
• The Appraisal Foundation
o State Agencies
 License Classifications