Appraisal Statutes

Is Your QC Appraisal Review Texas-Compliant?


What is a review appraisal?

“Appraisal review” means the act or process of developing and communicating an
opinion about the quality of another appraiser’s work that was performed as part of an appraisal assignment.

The term does not include an examination of an appraisal for grammatical, typographical, mathematical, or other similar administrative errors that do not involve the appraiser’s professional judgment, including compliance with the elements of the client’s statement of work.

Community banks and AMCs: do your contract review appraisers meet these Texas Appraisal Licensing & Certification Board (TALCB) requirements?

At a minimum

  • The review appraiser must have access to appropriate data sources for the appraisal being reviewed.
  • State that the scope of work for the appraisal review is commensurate with the requirements of Texas §1104.155 of the Act, this rule [159.155g Texas Administrative Code], and USPAP in effect at the time of the appraisal review.
  • State that the scope of work ensures the development of credible assignment results and that no assignment conditions impose limitations which make the results of the review not credible.

AND, do your contract review appraisers obey…

The 9 Commandments of Texas Appraisal Review

[Chapter 159.155-(g) of Texas Administrative Code]

To satisfy the requirements of §1104.155 of the Act, this rule and USPAP, a registrant performing a review must adhere to the following minimum scope of work:

ONE research and consult the appropriate data sources for the appraisal being reviewed to, at a minimum, validate the significant characteristics of the comparables and the essential elements of the transactions including:

(A) the multiple listing service(s) or commercial databases and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included a sales comparison approach;

(B) published cost data sources and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included a cost approach;

(C) the comparable rental data, income and expense data, and other recognized methods, techniques and data sources for the geographic area in which the appraisal under review was performed, if the appraisal under review included an income approach; and

(D) the sales or listing history of the property which is the subject of the appraisal under review, if that property was sold within the three years prior to the effective date of the appraisal under review or listed for sale as of the effective date of the appraisal under review, the scope of review must include research and consultation of that;

TWO state the reviewer’s opinions and conclusions about the work under review for each of the approaches to value utilized in the appraisal under review, including the reason for any disagreements;

THREE identify if the appraisal under review omitted an approach to value, a particular piece of information, or an analysis of either that was necessary for credible assignment results, identify what was omitted and explain why it was necessary for credible assignment results;

FOUR identify the client, any intended users and the effective date of the appraisal review;

FIVE state that the appraisal review’s intended use and purpose is to satisfy the requirements of §1104.155 of the Act and this rule, including ensuring that the appraisal under review complies with the edition of USPAP in effect at the time of the appraisal;

SIX state that the scope of work for the appraisal review is commensurate with the requirements of §1104.155 of the Act, this rule and USPAP in effect at the time of the appraisal review and that the scope of work ensures the development of credible assignment results and that no assignment conditions impose limitations which make the results of the review not credible;

SEVEN identify the appraisal under review, including:

(A) any ownership interest of the appraiser or reviewer in the property that is the subject of the appraisal under review;

(B) the report date and effective date of the appraisal under review;

(C) the effective date of the opinions or conclusions in the appraisal under review;

(D) the physical, legal, and economic characteristics of the property, properties, property type(s), or market area in the appraisal under review; and

(E) the name of all appraisers who signed or provided significant professional assistance in the appraisal under review;

EIGHT state clearly and conspicuously, all extraordinary assumptions and hypothetical conditions and state that their use might have affected the review; and

NINE contain a certification which complies with USPAP Standards Rule 3-6.

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