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COVID-19 Assignment Protocols and Report Recommendations for Appraisers

by Todd Paradis | Mar 20, 2020
The MBREA has issued the following COVID-19 assignment protocols and report recommendations for appraisers.

Assignment Protocols
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.
  1. Talk with your clients about Covid-19 to see if they have any protocols they would like you to follow.
  2. 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.
  3. The appointment scheduling call is a good time to let the borrower/owner know if you will be wearing gloves, not shaking hands, etc.
  4. 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?
  5. If the appointment is set for a few days later, you may wish to ask again when you arrive at the property.
  6. 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
Extraordinary Assumption
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