Department of Labor and Revenue

Title - South Dakota Appraiser Certification Program

News Articles - June 2011

Advisory Council Members Retire from their Positions with State Government

New Licensees' Information Regarding Disciplinary Actions

Anonymous Complaints

Review of Cases

Upgrades

2011 Renewal

Appraisal Management Companies to be Registered and Supervised in South Dakota

Distance Education Versus Classroom Education

Understanding the Appraisal Review Process

Advisory Council Members Retire from Their Positions with State Government

Roger Novotny, Director of the Division of Banking and Dee Jones Noordermeer, Executive Director of the Real Estate Commission, retired recently from their respective positions with state government. The Department staff and the Advisory Council members wish to extend thanks and gratitude to Roger and Dee for their many years of service on the Appraiser Certification Program Advisory Council and wish them the best in their retirement. Dee has served on the Council since 2003; Roger has served since 2004.

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New Licensees - April/May 2011

Michael W. Teel, State-Certified Residential — Gary, IN
Carl T. Risty, State-Registered — Sioux Falls, SD
Garth L. Ligtenberg, State-Registered — Piedmont, SD
Gregory R. Tritle, State-Certified

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Information Regarding Disciplinary Actions

Public information regarding disciplinary action taken against an appraiser is available upon written request to:

South Dakota Department of Labor and Regulation
Appraiser Certification Program
445 East Capitol Avenue
Pierre, SD 57501
email: appraisercertification@state.sd.us

Include in the request the name of the appraiser and the appraiser’s city and state of residence. (Disciplinary action may include denial, suspension, censure, reprimand or revocation of a certificate by the department. (See Administrative Rule of South Dakota (ARSD 20:14:11:03) for more information.)

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Anonymous Complaints

ARSD 20:14:11:01.01 - Anonymous complaints. Initiation of an investigation may be commenced upon receipt of an anonymous complaint if it meets the following criteria:

The allegations of violations of any provision of this article are considered credible and based upon factual information which is independently verifiable; and

The complaint is accompanied by a copy of the appraisal report or other documents which contain clearly identifiable errors or violations of the provisions of this article.

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Review of Cases — January 1, 2011 through May 5, 2011

For the period January 1, 2011 through May 5, 2011, the Department has received 3 upgrade applications and initiated 9 complaint investigations.

Upgrades — 3 pending.
Complaints — 8 pending and 1 dismissed.

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Upgrades — April 1, 2011 through May 23, 2011

William Bear, State-Certified Residential
Frank Weatherwax, State-Certified Residential

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2011 Renewal

The 2011 renewal applications will be mailed the first week in July. In order to renew your certificate for state-certified general, state-certified residential, state-licensed or state-registered appraiser you must submit the completed application, applicable renewal fees and verification of the required 28 hours of approved continuing education which includes the 7-hour National USPAP update course by August 17, 2011. [Pursuant to ARSD 20:14:11:03 the 2010-2011 edition of the 7-hour National USPAP update course must have been completed prior to June 30, 2010. If the course was not completed by June 30, 2010 the applicant will be assessed a $100 administrative penalty fee.]

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Appraisal Management Companies to be Registered and Supervised in South Dakota

Effective July 1, 2011 any person or entity acting as an appraisal management company or performing appraisal management services in this state, with limited exceptions, shall register with the Department of Labor and Regulation. See Laws and Regulations on this website for the statutes regarding registration and supervision of Appraisal Management Companies.

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Distance Education Versus Classroom Education

The Appraiser Certification Program uses two terms, distance and classroom, for acceptable education delivery methods when prescribing education in matters of complaint and upgrade disposition of cases.

Distance education is defined by the Appraisal Foundation's Appraiser Qualifications Board in the Real Property Appraiser Qualification Criteria as follows:

  • Distance Education is any education process based on the geographical separation of student and instructor.
  • Students completing distance education are not physically present in a traditional educational setting such as a classroom.
  • Classroom education, as used by the Appraiser Certification Program, is a class offered in the traditional classroom in which teaching or learning activities take place with the instructor and a body of students present in the room.

If education is prescribed for remedial action in a matter of complaint or upgrade, please make sure to complete the education in the specified delivery method. If you have questions, please contact Sherry Bren at 605.773.4608.

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Understanding the Appraisal Review Process

Courtesy of the Oregon Appraiser Certification and Licensure Board. Article reprinted from the Oregon Appraiser Newsletter — Spring 2011 Edition.

So much of what appraisers do is associated with unique definitions, terminology, acronyms and jargon. Consequently, how we describe certain professional activities is occasionally misunderstood by clients and, unfortunately, appraisal practitioners. One such area of practice that can be confusing is the appraisal review process. There are two critical definitions that serve to clarify what the review process is and how it is to be conducted. First, the USPAP definition of an appraisal review:

"The act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed as part of an appraisal, appraisal review or appraisal consulting assignment."

The key word of the definition is "quality." What constitutes the definition of quality is largely found in USPAP Standard Rule 3-3(a) which identifies the reviewer’s scope of work and the fundamental elements of an appraisal review. The term of art that establishes the minimum performance standard is "credible." Essentially, does the appraisal under review comply with the scope of work associated with the assignment while concurrently presenting a reasoned analysis based upon relevant market data which lends to a supportable value opinion? If not, then the review scope of work requires a discussion as to why a different position has been taken by the reviewer in accordance with SR 3-3(b). The review scope of work may also require the development of an opinion of value consistent with SR 3-3(c), in which case Standard Rule 1 becomes the performance baseline.

The rules pertaining to review are well defined and structured, thus the review process should be relatively straightforward. However, problems associated with the review process often occur when the reviewer provides an opinion of value. That brings us to the second critical definition. According to USPAP, an appraisal is:

"The act or process of developing an opinion of value, of or pertaining to appraising and related functions … Numerically expressed as a specific amount, as a range of numbers or as a relationship to a previous value opinion or numerical benchmark ..."

If an opinion of value is a relationship to another value opinion, consider an appraisal review which states that "the value reported is unsupported and appears high" or "the capitalization rate is overstated." How about "the adjustments applied appear unsupported and cumulatively result in an overstated value opinion?" In each instance the reviewer has indirectly reported a value opinion (appraisal). Without going through the steps of developing and supporting that value opinion consistent with applicable elements of SR 1 and SR 3-3(c), there is an obvious and substantive USPAP compliance issue.

What about a conversation wherein an appraiser makes a statement that, "I read that appraisal and it was terrible," or "that appraiser is always high and this appraisal is likely to be no exception"? Consider "I would have used a higher vacancy factor which would have resulted in a lower income approach value and lower overall value opinion." In each instance, an appraisal review was conducted which imposes compliance with SR 3-3(c). Finally, if you disagree with a review of your work, then your response must also comply with Standard Rule 3 because it is "an opinion about the quality of another appraiser’s work as part of an appraisal review."

The broader message to take from this discussion is to be careful when communicating with clients that you stay within your scope of work. If the scope of an appraisal review requires a value opinion, then it is necessary to comply with a much broader range of USPAP. In appraisals, as with appraisal reviews, it is professionally irresponsible to make value assertions that we cannot support. Without adequate documentation, it is also a violation of the licensing law and ultimately reflects poorly on the appraisal community.

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Marcia Hultman, Secretary
700 Governors Drive
Pierre, SD 57501-2291
Tel. 605.773.3101
Fax. 605.773.6184