A Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)-regulated engagement starts before a valuation file opens. Valuers confirm the subject jurisdiction, the intended use, the regulated-lending context and who is qualified to sign.
If an assignment includes an as-complete, as-stabilised or bulk-sellout value, valuers frame the premise at inception – typically a prospective value supported by an extraordinary assumption, not a hypothetical condition added late in the process.
From there, Uniform Standards of Professional Appraisal Practice (USPAP) are the baseline and the Interagency Appraisal and Valuation Guidelines are the overlay; the analysis is still valuation work, but the file must be bank-regulator ready.
That is the environment an RICS Valuation – Global Standards (Red Book Global Standards)-trained valuer encounters when a US federally regulated lender is the client.
The most consequential question I receive from RICS-credentialed colleagues is whether Red Book Global Standards compliance meets the requirements for that environment.
It does not. Not on its own, and not with formatting adjustments. The reason is that FIRREA and understanding it is the price of entry to the US institutional lending market.
RICS members considering US-based work should read this alongside Practical considerations for RICS valuers operating in the USA, which sets out the licensing and standards landscape in greater detail.
What FIRREA is and where it came from
FIRREA was Congress's response to the savings and loan crisis of the 1980s, in which inflated appraisals contributed materially to the failure of hundreds of lending institutions at significant public cost.
FIRREA created a mandatory federal appraisal regulatory framework, established state licensure requirements and recognised USPAP – promulgated by the Appraisal Foundation's Appraisal Standards Board and incorporated by reference in the agencies' appraisal regulations – as the minimum standard for appraisals in federally related transactions.
A 'federally related transaction' – a term defined under Title XI of FIRREA rather than the USPAP – covers virtually every commercial mortgage, construction loan or real estate-secured credit facility issued by a US bank, thrift, credit union or other federally regulated lender.
A FIRREA-compliant appraisal at or above the applicable threshold – which is currently $500,000 for most commercial transactions – must satisfy the following four conditions.
- State licensure: the signing appraiser must hold a state-issued certified general real estate appraiser credential in the jurisdiction where the subject property is located. Each of the 55 US jurisdictions maintains its own programme; a credential in one state does not authorise practice in another.
- USPAP compliance: the report must comply with the USPAP as promulgated by the Appraisal Foundation – not a foreign equivalent and not an International Valuation Standards-aligned standard without explicit USPAP adherence.
- Written certification: the report must contain a signed certification in a USPAP-prescribed form, including the appraiser's state certification number.
- Interagency Appraisal and Evaluation Guidelines: the report must satisfy the Interagency Appraisal and Evaluation Guidelines issued jointly by the federal banking regulators – a prescriptive overlay that supplements USPAP minimum requirements.
Notice what is not on that list: RICS membership, the FRICS designation, Red Book Global Standards compliance or any international credential. The framework is agnostic with regard to global professional standards.
That is not a slight – FIRREA was drafted in 1989 to prevent a domestic regulatory failure from recurring, and RICS members encounter it the same way any out-of-jurisdiction practitioner does: as a local requirement that applies regardless of professional standing elsewhere.
Valuing in a multi-state reality
I hold active certified general credentials in Illinois, Missouri, Indiana and Wisconsin.
For appraisal work outside those states, the default is to obtain a temporary practice permit where available; if there is no workable temporary-practice path, or timing will not support it, I bring in a state-certified appraiser in that jurisdiction as the local signer or co-signer.
Appraisal review is different: a USPAP Standard 3 review performed under my home-state credential requires no temporary permit and no local co-signer because the review does not include my own opinion of value for the subject property.
I run the check at engagement inception – property state, assignment type, intended use, FIRREA status, signer, permit or co-signature – because licensure is a threshold issue, not an administrative cleanup item.
Getting state-certified – what it actually takes
The certified general appraiser credential permits appraisal of all real property types and is required for most commercial lending work.
At the national minimum set by the Appraiser Qualifications Board, the path requires:
- 300 hours of qualifying appraisal education, including a 15-hour USPAP class with examination
- a bachelor's degree from an accredited institution
- 3,000 hours of documented appraisal experience over a minimum of 18 months, with at least 1,500 hours in non-residential work
- a passing score on a state-administered national uniform examination.
Renewal is required every two years in most states and involves 28 hours of continuing education, including a seven-hour USPAP update class.
For RICS members with foreign educational credentials, the degree requirement can be satisfied through equivalency evaluation by a member of the National Association of Credential Evaluation Services.
The experience requirement is the harder constraint – 3,000 documented hours under a state-certified supervisory appraiser cannot be compressed. And there is no current reciprocity between RICS and the Appraisal Foundation.
RICS membership, including the FRICS designation, does not substitute state examination or documented US experience, although I believe that discussions about closer alignment are ongoing.
'RICS membership does not substitute state examination or documented US experience'
Where does the VRS fit in?
RICS members entering the US sometimes ask whether the Valuer Registration Scheme (VRS) applies. It does not for valuations of US-located assets. VRS applicability follows the location of the asset, not the location of the valuer, and RICS mandates VRS membership only in markets where it can legally and practically oversee compliance.
The current US regulatory environment does not permit that oversight. A US-based RICS member valuing an asset in a VRS-mandatory jurisdiction would need to register, but that is a different question from US domestic practice.
'RICS mandates Valuer Registration Scheme membership only in markets where it can legally and practically oversee compliance'
The collaborative engagement model
Without state certification, the path that works best for valuation in the US institutional market is co-engagement.
The international practitioner brings the analytical expertise – methodology, sector knowledge and international comparable evidence – and works alongside a US state-certified appraiser who holds the signing credential and takes responsibility for USPAP compliance.
This approach is legitimate, commercially viable and widely practiced. The one condition for this method to work is that the structure is set before engagement; retrofitting this approach after a client expects a signed appraisal is where things can fall apart.
What does a Standard 3 reviewer actually examine?
Beyond licensure, valuation reports must comply with the USPAP, and USPAP Standard 2 imposes specific minimum content that Red Book Global Standards reports do not always include by default.
These include details of the client and all intended users, intended use, value definition and source, effective and report dates, scope-of-work compliance, all extraordinary assumptions and hypothetical conditions with their potential impact, and the signed certification with a state certification number.
Two requirements regularly catch international valuers off-guard: the signed final report must be retained in the appraiser's work file for at least five years, and the USPAP requires analysis of all sales of the subject property within three years of the valuation date, plus current listings, options or contracts.
The three deficiencies I most often flag in Standard 3 reviews are:
- prospective-value assumption framing, especially extraordinary assumption versus hypothetical condition
- certification mechanics, including prior services, inspection, licence, expiration and assistance disclosures
- reliance-path alignment, where the transmittal, lender programme, intended users and intended use do not tell the same story.
Client or intended-user language can be an issue, and certification language remains important, but scope disclosure is usually not the recurring weakness in recent review files.
The practical point is that a report can be analytically sound and still need correction to be usable in a regulated-lending environment.
Evaluation alternatives
Below the FIRREA threshold, or for transaction types specifically exempt from the appraisal requirement, federally regulated lenders can use an evaluation rather than a USPAP-compliant appraisal.
Evaluations have their own interagency guidelines requirements and can be prepared by professionals with real estate expertise who are not state-certified appraisers – a legitimate pathway for RICS members who do not yet hold state certification.
The classification must be accurate, and the engagement letter has to be specific about what is being delivered: an evaluation is not a USPAP-compliant appraisal and cannot satisfy FIRREA appraisal requirements for transactions that need one.
The bottom line
FIRREA is the architecture for US valuations, not an obstacle. It tells us who can sign, what standard governs, what the lender can rely on and what a reviewer or bank examiner needs to see.
The compliance layer of valuations is additive – credentialing, USPAP, certification, interagency requirements and reviewability – but the following analytical work remains fundamental: market analysis, highest and best use, the applicable approaches to value, and reconciliation.
The engagement–inception question is simple: do you have the right credentialed appraiser, in the right state, under the right FIRREA/USPAP/interagency scope before you open a file?
The views expressed in this article are the author's own and do not represent RICS official policy or guidance, CBRE official policy or the position of the Appraisal Foundation.
This article is the fourth in a series to mark the 50th anniversary of Red Book Global Standards. The series will look at how RICS' valuation framework is applied in a selection of non-UK jurisdictions and reflect on five decades of Red Book Global Standards more broadly.
Discover the new RICS Member App: CPD on the go
RICS has introduced a refreshed CPD approach that prioritises meaningful, high-quality learning that genuinely benefits your work and is tailored to your specialism, career stage, and the real-world challenges you face.
The new app makes logging CPD simpler and more intuitive, so you can focus on the development that matters to your practice.
