Wednesday, December 6, 2023 | The Latest Buzz for the Appraisal Industry

Protecting Your Appraisal Reports From Covid-19

Brent Bowen
Brent Bowen, President of Texas Valuation Professionals, Inc.

Appraisers are finding themselves in a fascinating time. The stock market has suffered a tremendous setback and daily life is beginning to resemble something out of a dystopian novel.  All of this is happening while appraisers are being flooded with orders. At the moment, it may seem that your biggest concern is keeping your head above water at work, all while wondering how you are going to manage homeschooling for your kids. Although less demanding of your attention right now, there is something else that needs to be considered: liability.

How are you addressing the market change from COVID-19 in your appraisals? If you aren’t, you are leaving yourself open to some serious liability. At this point, it may be too early to tell what sort of impact there might be on value and marketability, but the market conditions as of today are definitely different than they were for that comparable from 60 days ago. Some extraordinary assumptions are going to be necessary to address those unknowns. Is it reasonable to assume that marketing times will be extended given the current restrictions? In most markets, the answer will be ‘yes.’ Are you assuming that demand has shifted downward, or that demand is merely ‘pent-up’ for the future? The answers to those questions are going to depend a lot on what drives your market. You are the local market expert, so explaining how you think market conditions will impact value and marketability is critical to your report being credible in the current market. Make your assumptions based on how you think this impacts your market, then state those assumptions clearly and explain them.

Here is an example of what this might look like in your market: As of the effective date, the short and long-term impact on the market from the COVID-19 virus is unknown; however, it is reasonable to assume that current restrictions in market activity due to the virus will extend marketing times at least 60 days beyond the current levels. This assumption has been taken into consideration with regards to the estimate of reasonable exposure time. At this time, the appraiser assumes that there is a delay in market activity, but not a significant long-term shift in demand or supply which would result in a change in market prices. These are considered to be extraordinary assumptions which, if proven false, could impact the opinions and conclusions expressed herein.

Of course, your analysis and assumptions should be dependent on your market. Again, take the opportunity to be a trusted market expert. Use your skills and experience to analyze the available data to make appropriate assumptions and draw supported conclusions which are applicable to your specific market.

Although it is probably too soon for any meaningful market data, that will change. The stock market reacts on a dime, while the real estate market often takes some time to incorporate changing market conditions. Be prepared to challenge your assumptions as more data begins to present itself. Current inventory is often the first and best indicator of those changes, so don’t be so quick to discount a listing that seems to be an outlier. It could just be that what was once a statistical outlier is now forming the new equilibrium for your market.

Have any comments or would you like to submit content of your own? Email 

Mark Buhler

The Surfing Appraiser

Riding the waves of the appraisal profession can result in a range of outcomes and emotions over time. Appraisers, and surfers, have varying levels of

Read More »
Timothy Andersen, MAI, MSc., CDEI, MNAA

“Naked, Unarmed, and Alone?”

Question: “My state board recently charged me with authoring a misleading report. I got the client to write a letter to the state indicating my

Read More »