The Bible For Appraisers Is A Cash Cow For Its Creator. But The Industry Is Losing Faith

This is Part 3 of a four-part Bisnow investigative series exploring the appraisal profession, its importance to commercial real estate and the broader economy, and the people and organizations that govern the industry. Read Part 1 here, Part 2 here and Part 4 here.

All of the nearly 80,000 certified and licensed real estate appraisers in the United States must master the bible. The state and federal workers tasked with making sure those professionals are properly doing their jobs need to learn it inside and out, too.

But the bible keeps changing. 

An AI image of USPAP in renaissance art style

The holy text of the appraiser is the Uniform Standards of Professional Appraisal Practice. USPAP, as it is called, is handed down by The Appraisal Foundation, a nonprofit with a congressional mandate to write the rules for the appraisal industry.

The foundation releases a slightly different version every two years, setting off a wave of testing and recertification to ensure full knowledge and compliance. That process is an open sore for appraisers, many of whom have publicly critiqued the foundation's financial motivations and potential conflicts of interest.

The foundation, known as TAF, has also been the subject of increasing scrutiny from government regulators and industry watchdogs, who have raised concerns about its funding sources and lack of transparency.

“This private entity is benefiting from the public power of rule writing,” National Fair Housing Alliance General Counsel Morgan Williams said in an interview. “The publications are the largest source of revenue for The Appraisal Foundation, this private entity, so they are literally privately making money off of the paywall.”

Bisnow sifted through hours of federal hearings, financial reports and internal communications between TAF, its regulators and industry professionals, interviewing more than a dozen top players in the field and organization insiders. The reporting revealed that USPAP has come to represent a growing wedge between appraisers and the 13-person body that presides over them.

Many appraisers, along with fair housing groups and federal watchdogs, claim the foundation's push to bring in more revenue from USPAP and certifications undermines the public trust the industry relies on to be considered fair judges of property values — a faith that underpins the entire real estate industry.

TAF officials declined to make anyone available for an interview for this story and declined to comment when sent a detailed list of questions.

A new USPAP went into effect Jan. 1, the third new version of the text in the past six years. Every appraiser must buy a copy and complete a course to comply with state and federal laws, and as the foundation has issued new versions of the material, its revenue has grown alongside those sales.

Appraisal professionals don't just need to buy the text — they must take a seven-hour USPAP update course once every two years, taught by an instructor certified by the foundation. Those instructors also must pay TAF a fee to get certified before they can be hired by a course provider.

Although sales of USPAP drive revenue to the nonprofit, the mandated courses and certifying instructors to teach those courses generate the most cash flow, according to a high-level insider who is privy to TAF's internal conversations. Product sales made up 92% of the foundation's $4.8M in revenue in 2022, according to its latest tax filing.

“This is a money-generating machine,” the insider said on the condition of anonymity out of fear of reprisal.

David Bunton
Former TAF President David Bunton speaks at a hearing on appraisal bias Feb. 13.

'It's Too Much Change'

The USPAP copyright has been in The Appraisal Foundation's possession since 1987, even before federal laws changed in 1989, creating strict regulations on how appraisers could operate in the wake of the savings and loan crisis — and granting TAF its authority.

Between 2006 and 2020, USPAP was updated on a two-year cycle. The frequent changes — many of which were slight, with some introduced and subsequently cut — have generated ire in the industry, most of which has viewed the updates as needless and confusing.

Before releasing a new version of USPAP, TAF submits proposed changes for public comment. Bisnow obtained 22 emails containing those comments sent by senior members of the appraiser industry between 2018 and 2020 criticizing the frequent revisions to USPAP.

“Thirty years after the precipitating first financial crisis and over ten years since the last one, we are still adjusting USPAP every two years? It’s too much change,” John Cento, then-managing member of Indiana Business Appraisals, wrote in a 2020 email. “It is also unethical to sell USPAP materials because you have a conflict of interest in perpetuating this excessive frequency of changes.”

“The constant changes work against USPAP’s goal to ‘promote and maintain a high level of public trust,’” James Murrett, who served as the Appraisal Institute’s president in 2018, wrote to TAF in 2020. “Wouldn’t it be great for a profession to have a set of standards that did not have an expiration date?”

Cento and Murrett didn't respond to Bisnow’s requests for comment. 

Those complaints didn't stop TAF from continuing to change and sell new copies of USPAP. It was updated in 2020 and, following a pandemic publishing pause, another new version was rolled out this year.

The current version of USPAP costs $35, with $75 guidance sold separately on the foundation’s website. TAF’s website lists 23 providers from which appraisers can take continuing education courses. Fees for courses range depending on the provider, format and location. McKissock’s seven-hour recording costs $235. The Appraisal Institute’s classroom sessions cost roughly $200. 

TAF says the current version of USPAP has no expiration date. Appraisers are still required to continue taking and retaking the update course every two years — a practice that the nine working appraisers Bisnow spoke with viewed as tedious. 

“You take the course online, you click, click, click through it, you take the test, hopefully you pass it. If you don't, you take it again,” an appraiser told Bisnow under the condition of anonymity since they work in the industry.

Appraisers also remain suspicious of what the new USPAP’s lack of end date will mean in practice.

“There is no question that USPAP is going to be updated again,” the high-level insider said. “Don't be surprised if you see the next change a year later or 18 months later or whatever. All they're doing is saying, ‘We're not putting it on the schedule anymore.’ That's all they're doing.”

Paywalling The Law

In an 84-page review of TAF by the National Fair Housing Alliance published in 2022, the group flagged that important information necessary to an appraiser's daily work — and helpful for the public in understanding the appraisal process — is locked behind a paywall. 

That includes an appraiser’s obligations under federal fair housing and fair lending laws. Four of the 10 USPAP standards are available online for free, although they are accessible on TAF’s website only by navigating a series of links. 

The sheer volume of critical materials that TAF protects as its intellectual property has drawn sharp rebuke from the federal body that monitors the foundation, the Appraisal Subcommittee. The seven-member body is made up of officials from a swath of federal regulatory agencies, including the Consumer Financial Protection Bureau, the Department of Housing and Urban Development and the Federal Reserve.

During a May 2023 hearing of the subcommittee, HUD Assistant Secretary Julia Gordon said there are approximately 30 active advisory opinions and 367 FAQs behind the paywall, all important guidance on how to do the job properly.

The NFHA's report found that after a new USPAP is released, states must incorporate it into their laws, which can take years. It is an issue that dates back as early as 2003, when the Government Accountability Office released a report saying “the frequency of USPAP updates was an administrative burden and created challenges in investigating and enforcing complaints of USPAP violations.”

“In some cases, states can take years to adopt the changes through the state’s legislative or regulatory process,” the NFHA report says. “In other cases, the state merely incorporates the standards and criteria by reference, placing the burden on the appraisers to educate themselves on the various changes.”

The power TAF is given to operate as a nonprofit that has federal authority is called incorporation by reference. Although legal experts have criticized the ethics of these entities paywalling such materials, making core parts of the law free to access — such as the first four standards, in TAF’s case — does make the practice legal. 

“Material that is expressly incorporated by reference into law and thereby made mandatory should not be copyrightable, because it's black-letter law in the United States. Laws are not copyrightable,” Corynne McSherry, legal director of the Electronic Frontier Foundation, a nonprofit that promotes civil liberties on the internet, said in an interview. “Ancillary materials that aren't expressly incorporated into law in that way, the status of them can be unclear.”

TAF has used that gray area to justify charging fees to access the vast majority of appraisal rules, ethics and guidance, even in the face of sharp rebuke from its federal monitors.

“Those are a core part of the entire system, and if this is the system of record governing this industry, it is critical that all of that be public,” Gordon said during the May 2023 hearing of the Appraisal Subcommittee.

Members of the body pressed TAF officials at that hearing to commit to making more of USPAP free. TAF officials declined to do so, citing the organization's reliance on the funds it generates from USPAP.

“Congress, as I understand it, already knew that the foundation used this as a source of revenue,” TAF Appraisal Standards Board Chair Michelle Czekalski Bradley told the subcommittee. “The rest is intellectual property.” 

The Bible For Appraisers Is A Cash Cow For Its Creator. But The Industry Is Losing Faith
Consumer Financial Protection Bureau Director Rohit Chopra in 2023.

Even small-scale breaches of TAF's closely guarded copyright have been treated as serious threats.

After serving on two TAF committees, Miller Samuel CEO Jonathan Miller was accidentally sent a USPAP draft document, which he published on his blog Feb. 25, 2022. Soon after, he said a friend advised him to take it down from his page, warning him that TAF could retaliate against him. So he did.

Even still, months later, TAF sent Miller a letter, which he shared with Bisnow, both acknowledging that the material was removed and cautioning Miller not to repeat such a mistake.

“I'm not trying to do anything illegal or unethical,” Miller said in an interview. “It just shows how incompetent they are and how embarrassing it is for the industry to have them in the position that they have.”

Perceived Conflicts Of Interest

The process by which TAF appoints members to its board of trustees has also raised alarm bells with the NFHA. The industry watchdog outlined what it called TAF's pay-to-play selection process in its 2022 report: TAF required a sizable sum in application fees and donations to allow new members to join its board.

If an appraiser organization like American Society of Appraisers wanted to nominate a trustee, it would have to pay an application fee of $2,500 and make a donation of $3K to TAF. When a nonprofit group like the National Association of Realtors appointed a trustee, it would have to pay the fee and make a $7,500 donation. Those groups were called sponsors.

Following the backlash from the NFHA's report, TAF tweaked the structure at the end of last year. It changed the term sponsors to partners and cut the cost to apply. 

Consumer Financial Protection Bureau Director Rohit Chopra, who also sits on the subcommittee, dismissed those changes, writing in a letter in March that outside interests can still make financial contributions to TAF in exchange for influence.

TAF’s new bylaws say partners can only nominate trustees and that TAF can require them to make financial contributions at any time. Currently, 11 of 12 partners are the same organizations that previously paid fees to appoint board members, Chopra wrote. 

“The Appraisal Foundation’s governance structure is insular and favors private interests,” Chopra wrote.

Chopra declined Bisnow’s request for comment.

Williams, NFHA's general counsel, said TAF's governance structure prevents it from administering unbiased oversight because its board is made up of stakeholders in the industry. Those trustees can theoretically make rules that benefit their own companies and organizations. 

“Unfortunately, the limited transparency and accountability of The Appraisal Foundation is itself a barrier to reform,” Williams said.

Even beyond the board of trustees, TAF has been accused of fostering several other perceived conflicts of interest, further diminishing trust in the organization.

That includes concerns surrounding Czekalski Bradley, who heads the ASB, the board “responsible for writing, amending, and interpreting” USPAP. Her husband is a senior official at McKissock, which is among the largest providers of online appraisal courses and has a deal with TAF to distribute USPAP courses.

“If there were a conflict, we would absolutely recuse ourselves, but the fact is my participation and my husband’s participation in the profession do not cross,” Czekalski Bradley said at the May 2023 hearing.

Phil Crawford, who has been an appraiser for more than 20 years and has been critical of TAF on an industry podcast he hosts, said the board's inability to recognize that conflict of interest “goes to show you the quality of people that they have on their boards.” 

“For a great majority of us, we're all small-business owners, and we have to do all of this due diligence in our very small businesses that we're required to do,” Crawford told Bisnow. “And yet you look at our standard-setter, and they just throw it out the window. It's like they can just do whatever they want to do.”

Bisnow Reporters Matt Wasielewski and Ryan Wangman contributed to this report.