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70 As Chief Appraiser at a large valuation services provider, I routinely interact with asset managers at large financial institutions who indicate that, when accurately predicting the sales price of an REO property, Broker Price Opinions (BPOs) consistently outperform real estate appraisals completed by state licensed/certified appraisers. is is counterintuitive considering that obtaining an appraiser's license requires a significant educational commitment focused exclusively on valuation, as well as years of apprenticeship learning the trade, while a real estate broker generally provides valuation services as a tangent to the primary function of their licensure. Additionally, real estate appraisals are generally more expensive than BPOs and typically take more time to produce. Appraisers are understandably defensive when hearing such assertions, as no service provider wants to be put in the unenviable position of providing a less useful product at a higher cost and a longer turn-time. However, there are several factors that are entirely beyond an appraiser's control which promote this exact outcome. To fully appreciate this issue, it should be understood that state licensed and/or certified real estate appraisers are capable of providing opinions for much more than a single definition of value. e Uniform Standards of Professional Appraisal Practice (USPAP), which are the federal regulations that dictate the minimum requirements for real estate appraisals prepared in conjunction with federally related transactions, simply require that whichever definition of value the appraiser is utilizing for any particular assignment must be identified, along with the source of that definition, within the resulting appraisal report. is type of freedom within the USPAP would allow an appraiser to judge which definition of value is most appropriate for an assignment in the context of their client's intended use. However, federal banking regulations generally dictate the use of a single definition of value, known as "market value", when engaging an appraiser, even when the intended uses of the resulting appraisal report are drastically different. Within the USPAP (2014-2015 Edition), the term "appraisal" has a very broad definition, as follows: "APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services." Notice that the USPAP does not specify any particular type or definition of value that must be incorporated into said opinion. Rather, it specifically avoids such a connotation so that appraisers have more than one "tool in their toolbox" with which to appropriately satisfy the needs of their clients. However, federal banking regulations do not allow for this same intended flexibility. For example, the Federal Banking Agencies define the term "Appraisal" within the federal register (12 C.F.R. 323.2(a)) as follows: "Appraisal means a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion as to the market value of an adequately described property as of a specific date(s), supported by the presentation and analysis of relevant market information." erefore, when a federally regulated financial institution engages an appraiser, even for an assignment to appraise an REO property S U C C E S S F O R M U L A S / M I C H A E L F L O Y D The definition of "value" puts appraisers at a disadvantage. THEIR HANDS ARE TIED