At the 2024 National Association of Appraisers/Appraiser’s Conference and Trade Show (ACTS) in Colorado Springs, veteran appraiser and Walitt Solutions Principal Consultant Josh Walitt presented to the audience what appraisers need for their workfiles, so state inspectors don’t “come calling.” Colorado state inspectors also shared with the ACTS attendees what they are looking for from appraisers.

Walitt discussed the process appraisers might go through if they receive a complaint and spoke directly to complaints in Colorado, his home state.

“Complaints may not result in an investigation in Colorado, but it can be different in some states,” he said. “In Colorado, the board doesn’t necessarily look at every investigative result. The state board has the authority to delegate complaints, which means a staff member is handling it.

“I have acted as a contractor and a defender of appraisers receiving complaints,” Walitt said to the ACTS attendees representing 38 states. “As an appraiser, don’t think that you did everything fine and that it’s not a big deal. It may seem that way, but it won’t be. Be careful. As appraisers, don’t say ‘I can handle this,’ because it may not be as simple as one thinks.”

Walitt noted that in Colorado, he was seeing a slight decline in the number of complaints appraisers receive per month, and 42 percent of complaints between July 2021 and June 2022 were dismissed while 31 percent were delegated, and 27 percent were sent to the state board.

Boards determine whether a complaint has merit; in some cases, the initial screening reveals no issues, and an investigation might not be opened. No federal agency requires perfect consistency between all the states’ complaint and investigations processes. Some state boards, Walitt said, do look at the entire process, but Colorado has a split process. In a nine-month period in Colorado, half of appraisal complaints were dismissed outright, and some were split between delegation to staff and handling by the board.

Walitt shared there are about 100 complaints a year in Colorado, and that it has been “relatively stable” as far as complaints submitted.

He then asked the audience how many attended board meetings in their state. Only about half of the audiences’ hands went up.

“I was hoping all hands would have been raised,” Walitt responded. “You’ll learn a great deal by attending board meetings and what goes into the decision-making process. It is a good way to track discipline and see the process regarding keeping good players in the profession.”

Walitt also emphasized an appraiser’s workfile is critical with regards to state investigations. And whatever data the appraiser is putting into the workfile, be sure to research it. The whole purpose of having the workfile is to show the work conducted and where data and conclusions came from.

The investigator will always ask their favorite question: “Where is it,” Walitt noted. An appraiser’s support cannot be pulled out of thin air and it will be asked if they have saved enough where someone can reconstruct what has been claimed in the report.

Walitt stressed his three rules for appraisers to keep in mind regarding their workfiles, especially should they have to deal with a state inspector:

• If you see it, save it.
• If you state it, support it.
• Could a peer come to a similar result by looking at your workfile?

“If you are under investigation, first talk with an attorney and a USPAP expert,” Walitt said. “Remember what an investigator will think if an appraiser doesn’t have a complete workfile or doesn’t have one to show at all ­– they will think this is not a good impression. The relationship between development and reporting is what the workfile comprises. Saving research, comps, zoning data is important because appraisers must answer how they came up with the conclusions and what analyses they conducted. USPAP is really general, but sometimes it gets specific.”

Having support is critical and relevant to the process and workfile.

“Saying ‘I used my experience to come up with my conclusions,’ is not enough,” Walitt said. “Experience is wonderful and should be respected, but the state inspector still needs to see the data that supports your conclusion.” 

Colorado Department of Regulatory Agencies Investigators Scott Wentz and Robert Walker then shared their processes with the audience.

Wentz said he needs to see appraisers are properly identifying the problems, as well as verifying data with market participants.

Walker said he basically looks for reasoning, support and consistency in an appraiser’s workfile.

Walitt closed with a final reminder to appraisers.

“If you should get that notice or email from an investigator, don’t ever ask the question, ‘What do you need to see in my workfile?’ Again, that doesn’t leave a good impression,” he said. “It’s all about the process and being a professional.”