appraising, Real Estate, uspap

What are the Differences Between “Assignment Conditions” and “Scope of Work”?


For some unknown reason in our real estate industry, there is a huge misconception about the term “Scope of Work”. This issue is not just with AMCs, Realtors®, Lenders and Clients, but with Appraisers, and possibly Appraiser Regulatory Officials, as well. Recently, we’ve started hearing the term “scope creep” more and more; and just to let you know, there is no such term in appraising. Some appraisers might say the definition of “scope creep” is when their Clients come back for more and more after the original appraisal report was submitted upon completion of the assignment. This article will help you to understand the differences between Assignment Conditions and the Scope of Work for an assignment, and what a Client can justifiably request from you (the appraiser) after the submission of the original appraisal report. Let’s start with what happens chronologically.

First, an “Assignment” is defined as, “(1) an agreement between an appraiser and a client to provide a valuation service …” (Source: USPAP 2014-2015, Page U-1). “Assignment Conditions” are often thought of as being the conditions that a Client sets forth (generally in the form of an appraisal request or appraisal order) in regards to their requirements for the appraisal services they are requesting. In fact, as with any other type of agreement, assignment conditions set forth in an appraisal assignment agreement should be those which are mutually agreed upon by both parties to the agreement. Many times, an appraisal request will have pages upon pages of Client proposed “assignment conditions”. There is nothing wrong with that at all. You can either accept the appraisal assignment or decline it. Before accepting an appraisal assignment, you should always carefully read the proposed assignment agreement and be sure that you understand and agree with all the conditions of that agreement. As a professional appraiser, you must decline an assignment that is subject to unacceptable assignment conditions (Source: USPAP 2014-2015, AO-19 and FAQs). There is nothing that states you must accept an appraisal assignment. It is your choice.

Secondly, “Scope of Work” is defined as “the type and extent of research and analyses in an appraisal or review assignment” (Source: USPAP 2014-2015, Page U-4). Sometimes we receive fee and turntime quote requests before we receive an actual assignment. This is often one of the first steps in determining the “Scope of Work”. We ALWAYS should do preliminary research on a property before we accept an assignment. We should always: check to see if we have performed any services (appraisal or otherwise) regarding the subject property within the three-year period immediately preceding acceptance of the assignment; search the MLS or other source for current listings and prior sales of the subject; examine the tax records and any photos of the subject; examine the subject’s recorded deeds; and view aerial views of the subject property to determine if there are any other factors off-site (externalities) that may need further research because they may possibly impact or affect the subject negatively. From this initial research, we can identify some of the elements needed to determine the “Scope of Work” for the assignment. ONLY THE APPRAISER can determine the Scope of Work for an assignment, NOT THE CLIENT. Once you have completed the initial research and you have obtained enough information for an initial Scope of Work decision, you THEN can quote the appropriate fee and turntime based on the complexity of the assignment. Obviously, if an assignment is complex and will need additional time for research and analysis, an increased fee is warranted. Fee negotiations should be a part of your fee and turntime quote process. At the point when you receive the actual order (assignment), then you can accept the assignment (with all of its “Assignment Conditions” and with the appropriate fee and turntime you provided) or decline it.

Thirdly, this is where some Clients and appraisers get confused. Once the original appraisal report is transmitted to the Client, they can ONLY ask for any or all of these 3 items:

  1. Consider additional and specific comparable sales as provided via the Lender/Client.
  2. Provide further detail, substantiation, or explanation for the real estate appraiser’s value conclusion, through the registrant’s established dispute process.
  3. Correct errors in the real estate appraisal report.

Any other requests from the Client other than what is above cannot be addressed in that appraisal. Remember to always state in your addendum the date of any changes and the items that were changed; and change the signature date to the new signature date which is the date you made the changes to the appraisal report. Also, if it is necessary to re-inspect the subject property, be certain that the effective date of the appraisal is changed accordingly and that you comply with the USPAP requirement to report prior services.

If you have any questions or need assistance, please contact any member of the NCPAC Peer Assistance & Review Committee by clicking the link below. The link below will take you to the NCPAC Peer Assistance & Review Committee page on the NCPAC website:

Peer Assistance & Review Committee Members

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appraising, Real Estate



One of the most frequently asked questions we appraisers are asked is, “Is this a good time to buy or sell a home on the Outer Banks?” The real estate market on the Outer Banks is definitely promising, especially compared to where we were just a few short years ago. However, every buyer and seller’s personal situations are different. Therefore, the answer to whether it’s a good time to buy or sell can be quite complex.  Here’s what you need to know if you’re considering buying or selling a home on the Outer Banks right now.

The Outer Banks Real Estate Market is Promising

In mid-2006, the national economy had plummeted sharply, along with Outer Banks home values, at an equally alarming rate.  Many homeowners and real estate investors had become “upside down” in their loan debt versus property value ratios, making their ability to sell their homes almost impossible.  But recently, many Outer Banks areas’ values appear to have stabilized, and some areas are beginning to increase in value.  This is due to the continuing low federally-regulated interest rates, less numbers of short sale and foreclosure sale competition in the market, and more people holding on to their homes until their loan debt versus property value ratios were more equal.

Summary of the Current Outer Banks Real Estate Market

For a better understanding of the current status of the Outer Banks real estate market, consider the following important indicators.

  • Average Sale Price – In Currituck and Dare Counties, in the year 2013, the Average Sale Price of all residential single-family detached homes (not condos, townhomes or multi-family homes) sold through the Outer Banks Association of REALTORS® (OBAR) was $391,326.
  • Average Number of Days on the Market – The average days of Exposure Time (better known to laypersons as “days on market”) was 223 days.
  • Average List Price vs. Sale Price – The average List Price versus Sale Price ratio was 93.77%.  This means that sellers lowered the prices of their homes by an average of 6.23% from the price at which they listed their properties for sale at the beginning of the sale process.
  • Stability in the Market – Of the 2,178 homes listed in 2013, 1,223 homes sold, 549 homes’ listings expired, and 406 homes either re-listed later or withdrew their listings.  These statistics are very similar to the 2012 year’s statistics showing somewhat more “stability” in the market.
  • New Construction – As of March 2014 there were 178,700 more construction jobs in North Carolina compared to March of 2013 (Source: BLS).  In the South (the states of Delaware, Maryland, District of Columbia, Virginia, West Virginia, North & South Carolina, Georgia, Florida, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, and Texas) there was 464,000 new home starts in 2013, compared to 398,000, 308,000, 297,000, and 278,000 new home starts in the years 2012, 2011, 2010 and 2009, respectively (Source: NAHB).  These definitely are positive indicators for housing.

Is it a Good Time to Buy in the Outer Banks?

Many times, the first question to honestly ask oneself is, “Can I really afford to buy or sell?” If you have decent-to-good or excellent credit, pay your bills on time, and have experienced job stability over the last two to three years, then now may be a good time for you to consider buying a home.   However, if you have a mediocre-to-poor credit rating, excessive bills, pay your bills late often, or have recently switched employment in the last two to three years, right now may not be the best time for you to buy.  Lenders are stricter now, more than ever, when it comes to qualifying for a loan, and even small financial mistakes can mean big problems at the bank.  Continue to work with your creditors to make things right, clear as much of your debt as possible, and absolutely, check your credit report for errors.

Is it a Good Time to Sell in the Outer Banks?

If you have equity in your home (meaning you are not “upside down”) and have no major repair or damage issues, then the answer may be “yes”. However, if you want to sell and you are still excessively “upside down” in respect to your loan debt to property value ratio, or you have a home in need of excessive repairs or one that has damage, the answer to selling your home right now may be a “no”.  Speak to your lender about the possibility of a short sale of your home.  A short sale occurs when a lender agrees to accept a sale price that is less than the amount of debt you owe on your loan.  Just remember, you have to pay taxes (sometimes Federal and State) on the difference between what you owe and what they are willing to take to cancel the debt.  You will receive an IRS form 1099-C for that difference and it gets counted as income on your next tax return.  Always consult with a lawyer or tax professional before you enter into a short sale agreement with your lender.

The Takeaway

We had a long, cold winter on the Outer Banks with many days of foul weather and precipitation, which slowed most all construction.  However, it looks like Mother Nature is beginning to smile down upon our area with warmer temperatures and bright sunny days.  Beach traffic is stepping up, along with the number of visitors we encourage to come and enjoy our area, and many times, our visitors come year after year.  So you ask, “Is this a good time to buy or sell a home on the Outer Banks?” . . . if you can answer “yes” to “Can I really afford to buy or sell?” the answer is an unequivocal “YES”, and when you do, seek the advice and services of local REALTORS® and local Real Estate Appraisers to help you with the process.  Who knows the market better?

[Statistical and Informational Sources: Outer Banks Association of REALTORS® Multiple Listing Service (OBAR), U.S. Bureau of Labor and Statistics (BLS), National Association of Home Builders (NAHB).]

Photo image credit: Steven W. Craddock, CDA, HMS of AppraiseNC4U, Inc.