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"Despite all the negative criticism of appraisal management companies, the one bright spot, in my opinion, has been the reemerging independence of the valuation process. AMCs have helped insulate appraisers from the advocacy of special interests, giving them considerably more control over the valuation process and more importantly, over their own livelihoods." knowledge who produce quality work. We place considerable reliance on the geographical competency of the appraisers and agents we use. We want agents and appraisers who know the specific nuances of their market. In conjunction with that, the training of our auditing staff is an ongoing process necessary to ensure our quality control measures are consistent with client expectations. Regarding the actual assignments themselves, one big change—and this is industry-wide—is that we ask our appraisers and agents for greater transparency on all appraisal and BPO assignments. A competitive market analysis (CMA) is required to provide a broader look of all comparables within the market and highlight market-specific areas of concern. More importantly, CMAs help to highlight declining markets, assess absorption rates; in reemerging markets they help to highlight price stability, and as we've been seeing lately, point to increases in actual market value. DS: What role do appraisers and other valuation providers have in restoring the marketplace? How are they contributing to the market's recovery? Froelich: USRES has its own AMC department. Despite all the negative criticism of appraisal management companies, the one bright spot, in my opinion, has been the reemerging independence of the valuation process. AMCs have helped insulate appraisers from the advocacy of special interests, giving them considerably more control over the valuation process, and more importantly, over their own livelihoods. It has helped eliminate the prospect of targeted valuations in return for additional orders. In any recovery, it is paramount that appraisers, agents, and brokers provide reliable, transparent valuations and pricing opinions 64 independent of duress. Restoring confidence in the valuation process is the first step, I believe, toward an actual market recovery. DS: How is the valuation industry being impacted by regulation, oversight, and the (over) reach of government? Froelich: This is the most burdensome part of my job as it relates to AMC regulations. As we continue to register with each and every state, the individual regulations on a state-bystate basis require full-time staff as well as a compliance officer that oversees the growing list of requirements . We keep an actual AMC calendar so we can prepare for re-registration. We've already been through the process twice in a number of states, and the list of regulations continues to expand. Every state is different, and pouring through the different registration processes, including fingerprinting, surety bonding, and a number of growing regulations, creates additional overhead. DS: How has the crisis changed the valuation industry? As we pull out of this historic downturn, what will the valuation landscape look like going forward? Froelich: Most appraisers are taking this time to reorganize and embrace emerging technologies, with emphasis on regression analysis, graphically defined market areas, visual market data, and trend analysis. Appraisers and agents alike are having to restock the toolkit, so to speak. The industry requires a more transparent appraisal/BPO in order to meet the new challenges of the marketplace. One of the unforeseen consequences of the crisis is that it's effectively driven many appraisers out of the profession. The average age of a certified appraiser in this country is approximately 51 years of age, with 17 years of appraisal-related experience. New regulations are requiring a mandatory four-year degree with an emphasis on finance as the requirement for all state certifications, commencing in 2015. This means appraisers are going to have to take on a considerable financial burden prior to their first assignment. The hope is that the new generation of appraisers will have a greater financial foundation and be better equipped to handle industry challenges, but in the interim, we're faced with fewer certified, good-quality appraisers available for the number of assignments out there. DS: What issues are top-of-mind for appraisers and other valuation professionals today? Froelich: One area of concern is customary and reasonable fees. Obviously as an AMC, we're sensitive to that. Appraisers are being asked to provide more data, and as a result, they should be fairly compensated. That's something that appraisers talk about on a daily basis and is of considerable concern to those of us in the industry. There are requirements to ensure appraisers are fairly compensated and to require full disclosure on the part of the AMC and vendors regarding how much each party is getting from each assignment fee. Turn times within the industry are also an area of concern on our collective radar. Most of our SLAs [service level agreements] are structured along almost unrealistic turn times at this point considering the few good-quality appraisers available for assignments. Generally speaking, industry standards revolve around a five- to seven-day timeframe. Depending on the geographical region of the country and the complexity of some assignments, five to seven days can be a difficult threshold to meet. It can be done, but it's sometimes a significant challenge. It would be beneficial if the industry would take a look at the actual number of appraisers available in any geographic region, and determine whether or not those are realistic time frames. These are certainly two areas of major concern that will affect the long-term health of the appraisal industry—reasonable turn times and reasonable fees. Brad Froelich is USRES' chief appraiser. He became a certified appraiser in 1993 and has worked exclusively within the finance industry for the past 27 years as a residential appraiser and auditor.

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