- 4 May, 2004 -

As is in many, if not most, areas of commerce, the United States is the hands down world leader in business systems and practices. This is, without question, the case in real estate appraisals. We have been the world leader in mortgage lending for many decades. This has paved the way for us to develop a sophisticated system for evaluating collateral for these loans. Thanks to Fannie Mae, Freddie Mac, the Appraisal Foundation and the Appraisal Institute, among others, we have the best collateral evaluation system in the world with approximately 80,000 state certified appraisers. If we have the best system what are the other countries doing? First, there are few, if any, government certified real estate appraisers in other parts of the world. The bar for qualification seems to be much lower and is usually tied to membership in some organization or relegated to real estate sales people, surveyors, etc. In Canada real estate appraisers are members of the Canadian Appraisal Institute. In England this function is relegated more to brokers and surveyors. In fact, a real estate valuator in England is referred to as a surveyor. In some of the lesser-developed countries the profession is even much less sophisticated. Rather than a traditional appraisal, which we are accustomed to receiving, the highest level or state of the art appraisal may be the rough equivalent of a BPO. This may be prepared by someone with few, if any, official credentials. Regardless of the state of the art in a given locality, local rule trumps everything else in real estate valuation. What may seem rudimentary in the United States may be presented with an air of professionalism in other countries. Thus, the traditional method of collateral evaluation employed in a given area will dictate the method used, even if the lender might prefer a more sophisticated product. This is due to the lack of local data sources and professionally trained vendors, as well as the absence of strict government regulations.

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