“APPRAISERS ARE MIRRORS; they are reflecting market value,” John Russell, senior director of government relations and business development for the American Society of Appraisers, said at the 2019 NVAR Legal and Appraisal Summit on Nov. 21.

When evaluating the value of a property, bifurcated and hybrid appraisals are two types of valuation products that have the potential to distort an accurate reflection of market value. Addressing concerns surrounding these appraisals, the National Association of Realtors® (NAR) Board of Directors approved a new policy at the 2019 NAR Annual Meeting in San Francisco in early November, Russell explained.

This new policy clarifies that “there are instances where the bifurcated term may be used synonymous for hybrid and bifurcated assignments, however they are two different valuation products … the differences are the method of the data collection.”

• Bifurcated appraisal – traditionally utilizes a state credentialed appraiser to view the property and provide the data to another state-credentialed appraiser to complete the assignment.
• Hybrid appraisal – utilizes a third party to collect data for the subject property. The third party is not a state- credentialed appraiser. This data is provided to a state-credentialed appraiser to complete the development, analysis and reporting of the assignment.

“Appraisers are going to do most everything we can to support the sales price. I’m looking for updates, features, views – anything that can add value.” - Mark Bird

The problem with bifurcated and hybrid appraisals is that the data collectors often don’t have geographical competency at the site location – meaning they don’t have the local market expertise and/or don’t regularly complete assignments in the area, Russell explained.

The policy states that “Realtors® support independent valuations of real property performed by state-credentialed appraisers. Using a professional appraiser for the entire valuation process remains the best practice...”

In his presentation, Mark Bird, an appraiser with Bird & Associates and a Realtor® with Samson Properties, also highlighted the importance of using a professional appraiser – explaining that an appraiser does more than provide a price estimate. Appraisers provide a full market report, identify special features of the house, walk and measure the entire property, and more.

Bird encouraged Realtors® to provide all relevant property information to appraisers, such as a timeline and list of renovations, so that the appraisers can create the most accurate valuation.

“Appraisers are going to do most everything we can to support the sales price,” Bird said. “I’m looking for updates, features, views – anything that can add value.”

Even though appraisers are often chosen by lenders, Realtors® have a responsibility to explain differences in valuation products to their clients, Russell said.

“You are an advocate for your client,” Russell said. “You don’t get to take that hat off just because there is a lender … part of that is understanding what they [clients] are receiving from a third party. As your client’s agent, you are educating them along the way.”

To view a copy of the NAR policy related to bifurcated and hybrid appraisals, visit NVAR.com/appraisalpolicy.


Kate O’Toole is the NVAR digital content manager & senior editor.