National Uniform Standards of Professional Appraisal Practicevaao.org/wp-content/uploads/2018/07/USPAP_2018-19_7-Hour.pdf · Explain revisions to USPAP effective Jan 1, 2018 through

National Uniform Standards of Professional Appraisal Practice

© 2018 by The Appraisal Foundation

PREVIEW

Design■ Course incorporates use of the USPAP

publication.■ “From Your Perspective” exercises are

intended to illustrate applications of USPAP.■ “Back to Basics” segments are provided to

help keep things in context.

2


■ Student Manual■ USPAP publication, which includes:

1. USPAP 2. Advisory Opinions (AO)3. Frequently Asked Questions (FAQ)4. Index

Materials You Will Need

PREVIEW

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PREVIEW


■ Explain revisions to USPAP effective Jan 1, 2018 through Dec 31, 2019

■ Present changes to USPAP for class discussion

■ Present discussion examples that challenge participants to interpret and apply USPAP

Course Objectives

PREVIEW

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PREVIEWPage ii


■ Smoking areas■ Please silence electronic devices■ Audio/video recording is prohibited■ Be considerate of those near you

Announcements

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■ Break times and lunch■ Restroom locations■ Attendance sheet■ Certificates and evaluation forms

PREVIEW

Announcements

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<Instructor name>

<phone>

<email>

<any other pertinent information>

Instructor

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INTRODUCTIONS


● Personal Property, Real Property, Intangible Property

● Appraisal, Appraisal Review, Mass Appraisal

What do these various disciplines and assignment types have in common?

PREVIEW

Before we begin …

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INTRODUCTIONPage 1


● Importance of public trust● Bases for ethical and competent performance

● Underlying economic principles● Appraisal process (approaches to value)

PREVIEW

Before We Begin …

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INTRODUCTIONPage 1


Changes to USPAP

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SECTION 1Page 3


The USPAP publication includes:■ USPAP■ Advisory Opinions■ Frequently Asked Questions■ Index

Back to Basics #1

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The overriding principle behind changes is public trust in appraisal practiceExposure drafts are produced based on input

from:■ Appraisers■ Users of appraisal services ■ Other interested parties

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Why and How Changes are MadePage 4

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SECTION 1


The ASB issues each exposure draft■ Draft is issued by ASB■ Exposure period is at least 30 days –

often 45 to 60 days

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Why and How Changes are MadePage 5

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Comments received■ A permanent file is maintained■ All comments are read and valued by

each ASB member■ Comments often lead to changes in what

is exposed

Why and How USPAP Changes

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Exposure process■ After considering all comments, ASB

may issue a subsequent exposure draft

■ There were 3 exposure drafts for the 2018-19 edition


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Finalizing any changes to USPAPFinal action on a proposed change may be taken only

after:■ Completion of the exposure process; and ■ Discussion and adoption at a public meeting.


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Finalizing any changes to USPAP■ Once adopted, only administrative edits may be

made.

■ Final changes for 2018-19 were adopted at the ASB’s public meeting February 3, 2017.


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Back to Basics #2Definition of Assignment Results■ Assignment results include all opinions and

conclusions in appraisal practice

■ In an appraisal assignment – not just value!

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Definition of Report■ Rationale

● Prior definition applied only to communication to the client; in some cases, communication is sent to some other party

● Need for the Comment regarding oral reports was questioned by stakeholders

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Definition of Report■ What changed?

● “… to the client or a party authorized by the client …”

● The Comment regarding oral reports was deleted

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Definition of Report■ Impact on Practice

● The change is consistent with common practice

● The change adds some clarity to USPAP, but should not impact most appraisers’ practices

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ETHICS RULE■ Rationale

● Conduct section addressed inappropriate communication of reports, but not other forms of communication.

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ETHICS RULE■ Rationale (continued)

● Some assignments may include communication prior to transmission of a report

● Assignments other than appraisal or appraisal review may have assignment results, but do not include a report (as defined in USPAP)

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ETHICS RULE■ What changed?

● Two of the bullet points were edited

● Re: misleading or fraudulent “… report or assignment results …” (see text)

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ETHICS RULE■ Impact on practice

● This change should have little or no effect on appraisers’ practices

● Change will enable regulators and professional organizations to take action against clearly unethical behavior

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RECORD KEEPING RULE■ Rationale

● The RECORD KEEPING RULE did not address communication of assignment results prior to transmittal of a report.

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RECORD KEEPING RULE■ Rationale

● The development process should be unaffected by the type of report.

● Restricted Appraisal Reports must have sufficient documentation in the workfile for the appraiser to produce an Appraisal Report

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RECORD KEEPING RULE■ Rationale (continued)

● Oral reports do not have a similar workfile requirement

● The last bullet point in the RECORD KEEPING RULE was not consistent with the stem at the top of the list

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RECORD KEEPING RULE■ What changed?

● Prior to: “… or other communication of assignment results.”

● Last bullet point moved to a new paragraph and expanded to address oral reports.

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Pages 9-10SECTION 1


RECORD KEEPING RULE■ Impact on practice

● Most appraisers start the workfile at the beginning of the assignment – if not, it must now be prior to communication of any assignment results

● Workfile requirement for oral reports is now clearer

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Relationship among changes ■ Changes to ETHICS RULE and RECORD

KEEPING RULE relate to reports (as defined in the 2018-19 edition)

■ Changes to ETHICS RULE and RECORD KEEPING RULE also relate to other communications

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From Your Perspective #1

■ May the appraiser communicate an opinion of highest and best use prior to a report?

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Yes. Nothing in USPAP prohibits communication with the client during an assignment. However...



■ Must the appraiser keep the workfile?

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Yes. The RECORD KEEPING RULE states “An appraiser must prepare a workfile for each appraisal or appraisal review assignment” and it specifies that the workfile “must be in existence prior to the issuance of any report or other communication of assignment results.”


Definition of Assignment - Rationale

■ Prior definition included both the agreement and the service

■ There were places in USPAP where which meaning applied was unclear

■ ASB considered a added a new term (e.g., engagement)

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Definition of Assignment - What changed?

■ Eliminated the agreement portion of the definition

■ Added the phrase “by an appraiser”

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Definition of Assignment Conditions - Rationale

■ This expression has a meaning that is specific to USPAP that had been stated in the SCOPE OF WORK RULE

■ Assignment conditions are addressed in the SCOPE OF WORK RULE and in the development Standards

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Definition of Assignment Conditions - What changed?

■ Definition of assignment conditions added

■ The definition was taken from the SCOPE OF WORK RULE and reformatted

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Definitions of Intended Use and Intended User –Rationale

■ These definitions were reviewed due to use of “at the time of the assignment”; the intent was unclear

■ Change to the definition of assignment resolved that issue, but minor edits were made for clarity

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Definitions of Intended Use and Intended User - What changed?

■ Minor edits for clarity and consistency

■ See Student Manual for edits

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Change to the COMPETENCY RULE – Rationale

■ “Prior to accepting an assignment” was awkward, and given the change to the definition, out of context in the Being Competent section.

■ In Comment, use of “at the time of the assignment” was not clear

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Change to the COMPETENCY RULE – What Changed?

■ “Prior to accepting an assignment” was changed (now, “prior to agreeing to perform an assignment”)

■ In Comment, use of “the time of the assignment” was changed to “the time the assignment is performed”

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Changes to the Definitions of Intended Use, Intended User, Assignment, and to the COMPETENCY RULE – Impact on practice

■ Little or no impact on practice

■ Overall impact – the intent and application of USPAP is clearer

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1. Does adding an intended user change the scope of work?

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Probably not. The appraiser must confirm that the use of a financial planner does not trigger any additional development-related requirements. If it does …



2. Does adding an intended user result in a new assignment?

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Not necessarily. The assignment may have changed, but as long as the change is during the assignment, it is not necessarily a new assignment. On the other hand …



3. What if the changes came after the report had been sent?

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In this case, …; the change does not occur “at the time of the assignment” (per definition of intended user). The only way to accommodate such a request at this point would be in a new assignment.



Which are assignment conditions?

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Assignment conditions are only those items that affect the appraiser’s scope of work.

Therefore, the following are assignment conditions: a, b, and d.


Definition of Assumption retired – Rationale

■ Reason for a Definition is to convey a USPAP-specific meaning

■ The meaning of assumption in USPAP is no different than its plain English meaning

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Definition of Assumption – What changed?

■ The Definition has been removed from USPAP

■ The term assumption is still used in USPAP, but its meaning is not USPAP-specific

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Definition of Extraordinary Assumption –Rationale

■ Concern that difference between assumption and extraordinary assumption were unclear

■ Some properties have specific uncertain conditions

■ It is important that intended users understand extraordinary assumption and possible impact

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Definition of Extraordinary Assumption –What changed?

■ Language in the Definition was edited for clarity

■ Wording of the Comment to the Definition was also edited

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Definition of Extraordinary Assumption –Impact on practice

■ Appraisers must continue to differentiate between assumptions and extraordinary assumptions

■ The reporting requirements have not changed

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Back to Basic #3Definition of Hypothetical Condition■ Contrary to what is known to exist

■ Requirements for use in development are somewhat different from extraordinary assumptions (See SR 1-2(f) and SR 1-2(g))

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Is this an extraordinary assumption or a hypothetical condition?

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Hypothetical Condition. The condition (as if a variance had been granted) is contrary to what exists as of the effective date of the assignment results.



What assumptions, extraordinary assumptions, or hypothetical assumptions might apply?

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Extraordinary assumptions - the construction will be complete and the certificate of occupancy issued on or before the effective date and the construction will be completed in accordance with the plans and specifications.



May the appraiser use this extraordinary assumption?

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No. The Comment to Standards Rule 1-2(f) states that an extraordinary assumption may be used in an assignment only if the appraiser has a reasonable basis for the assumption.


Definition of Appraisal Review and Dividing STANDARD 3 - Rationale

■ Appraisal has separate Standards for development and reporting

■ Definition of appraisal is limited to development and may be a noun or an adjective

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Definition of Appraisal Review and Dividing STANDARD 3 – Rationale

■ Appraisal review had a single Standard covering both development and report

■ Definition of appraisal review was defined as a noun only

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Definition of Appraisal Review and Dividing STANDARD 3 – Rationale

■ The former STANDARD 4 (Real Property Appraisal Consulting, Development) had been retired

■ Dividing appraisal review into two Standards would enhance the consistency of USPAP

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Definition of Appraisal Review and Dividing STANDARD 3 – What changed?

■ Definition of appraisal review revised to be more consistent with the Definition of appraisal

■ STANDARD 3 was divided into STANDARDS 3 and 4 and restructured to be parallel with appraisal Standards

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Definition of Appraisal Review and Dividing STANDARD 3 – Impact on Practice

■ Performance-related expectations are unchanged

■ USPAP is more consistent and requirements for different assignment types are more clearly parallel

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Back to Basics #4

Development vs Reporting■ Development begins with problem

identification and leads to credible assignment results in the context of the intended use

■ Reporting Standards require the report be sufficient for the intended users to understand it

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SECTION 1



When do STANDARDS 3 and 4 apply?

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See FAQ 305


Mass Appraisal: Dividing STANDARD 6 and Revisions to AO-32 – Rationale

■ The former STANDARD 5 (Real Property Appraisal Consulting, Reporting) had been retired

■ Dividing mass appraisal into two Standards would enhance the consistency of USPAP

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■ STANDARD 6 had not had an in-depth review for over 10 years

■ Mass appraisal experts were consulted

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■ Experts suggested several changes

■ Changes to Standard would trigger a need to revise AO-32

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Mass Appraisal: Dividing STANDARD 6 and Revisions to AO-32 – What changed?

■ STANDARD 6 was divided into STANDARDS 5 and 6 and restructured to be parallel with other appraisal Standards

■ See USPAP for full text of Standards

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Mass Appraisal: Dividing STANDARD 6 and Revisions to AO-32 – Impact on practice

■ Changes apply only to those engaged in mass appraisal

■ USPAP is more consistent and requirements for different assignment types are more clearly parallel

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Which development standards apply?

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See ADVISORY OPINION 32, Illustration 3


Changes to STANDARDS 7 and 8 - Rationale

■ The term market value is seldom used in personal property appraisal

■ It was suggested that removal of the term would make USPAP more consistent with common practice

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Changes to STANDARDS 7 and 8 - Rationale

■ Personal property appraisers with different specialties sometimes collaborate in an assignment

■ The certification requirement required all personal property appraisers to accept full responsibility for entire report.

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Changes to STANDARDS 7 and 8 – What changed?

■ The term market value was removed

■ The Comment to Standards Rule 8-3 (re: Certification) was edited

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Changes to STANDARDS 7 and 8 – Impact on practice

■ Edits to STANDARDS 7 and 8 impact personal property appraisers only

■ USPAP is now more consistent with the common language and practice in personal property appraisal

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Revision to ADVISORY OPINION 21 –Rationale

■ Prior version had two charts to illustrate applicability

■ A third chart was suggested to the ASB

■ Reaction to proposed new chart – one of the prior charts not needed

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Revision to ADVISORY OPINION 21 – What Changed and Impact on Practice

■ See new graphic in Student Manual (page 27)

■ No impact is expected

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Is this service allowed under USPAP? If not, can I perform it outside of USPAP?

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See FAQ #330



Does this assignment fall within appraisal service? And, must I comply with USPAP in completing the assignment?

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SECTION 1

See FAQ #331


Creation of ADVISORY OPINION 37 – Rationale

■ Use of computer assisted tools has become more common

■ Appraisers have obligations when using these tools

■ There are existing AOs regarding use of AVMs and DCF

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Creation of ADVISORY OPINION 37 – What changed?

■ ASB adopted ADVISORY OPINION 37, Computer Assisted Valuation Tools

■ The existing AOs regarding use of AVMs and DCF were left unchanged

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On which cost estimate should the appraiser rely? Why?

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See ADVISORY Opinion 37, Illustration 1



Is the appraiser correct in deciding that the output was credible? Why or why not?

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See ADVISORY Opinion 37, Illustration 2


Revisions to ADVISORY OPINION 31 –Rationale

■ Reliance on significant appraisal or appraisal review assistance triggers obligations

■ Significant assistance is not defined in USPAP

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Revisions to ADVISORY OPINION 31 – What changed?

■ Material added to AO-31 explaining what is meant by significant appraisal assistance

■ A new Illustration was added to AO-31

■ Edits made to reflect changes to Standards Rule 8-3 certification requirement

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Revisions to ADVISORY OPINION 31 –Impact on practice

■ Will not affect most appraisers

■ Clearer guidance to help differentiate between significant appraisal assistance and other assistance

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From Your Perspective #13What is the appropriate way to acknowledge the

trainee’s role in the assignment?

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Signing a certification accepting responsibility for the entire assignment would not be appropriate. Trainee must be named in the certification, and the nature of his significant assistance must be reported. (based on ADVISORY Opinion 31, Illustration 5)



Is this appropriate? Why or why not?

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No. Although she was competent to perform her assigned task, reading the report and discussing it with the senior appraiser does not confer competence. Therefore, she cannot accept full responsibility for the assignment results or sign the certification. (based on ADVISORY Opinion 31, Illustration 6)


Revisions to ADVISORY OPINION 1 –Rationale

■ USPAP requires analysis of agreements of sale, etc.

■ Analysis must be summarized in the report (even in Restricted Appraisal Reports)

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Revisions to ADVISORY OPINION 1 –Rationale (continued)

■ Guidance in AO-1 focused on situations where info was not available

■ Feedback from regulators and others indicated that many reports have no summary of these analyses

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Revisions to ADVISORY OPINION 1 – What changed?

■ Extensive changes to AO-1 (starts on page 69 of USPAP publication)

■ New Illustrations were added to the AO

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Revisions to ADVISORY OPINION 1 – Impact on practice

■ Expectations when an analysis is required are now more clear

■ Several examples have been provided for appraisers

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What should be included in the report?

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See ADVISORY OPINION 1, Illustration 2. The Illustration lists three possible responses to this question. In practice, the answer will vary based on the facts related to the subject and its listing.




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See ADVISORY OPINION 1, Illustration 3. The Illustration lists three possible responses to this question. In practice, the answer will vary based on the facts related to the subject and the agreement.




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See ADVISORY OPINION 1, Illustration 4. The Illustration lists three possible responses to this question. In practice, the answer will vary based on the facts related to the subject and the prior sale.




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See ADVISORY OPINION 1, Illustration 5. The Illustration lists three possible responses to this question. In practice, the answer will vary based on the facts related to the subject and the reason that the information is not available.


Back to Basics #5Definition of Appraiser’s Peers

■ Assignment-specific

■ Based on expertise and competency

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USPAP Flexibility and Expectations

■ Another Look at Scope of Work

■ Report Content Requirements

■ Analyze and Summarize – What is Expected?

Section 2

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Section 2 will include:

■ Another Look at Scope of Work

■ Report Content Requirements

■ Analyze and Summarize – What is Expected?

Another Look at Scope of Work

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Back to Basics #6Three Key Definitions■ Valuation Services

■ Appraisal Practice

❖ Note – all of appraisal practice falls under valuation services

■ Appraiser

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Appraisers’ practices vary

■ Different intended uses

■ Different property types

■ These may lead to different scopes of work


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Appraisers may provide other services

■ Not limited to appraisal and appraisal review (as defined)

■ These other assignments – no STANDARDS, but some Rules apply.

■ ETHICS RULE, COMPETENCY RULE, and JURISDICTIONAL EXCEPTION RULE


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Scope of work flexibility

■ Appraiser has flexibility in determining scope of work

■ Appraiser has responsibility for the scope of work decision


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Back to Basics #7Two More Key Definitions■ Scope of work

❖ Research and analysis

■ Credible

❖ Worthy of belief

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In addition to scope of work -

■ Appraiser may have flexibility in determining report content and format

■ This will be addressed later in the course


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Do aerial viewings via a drone constitute a personal inspection?


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See FAQ 214

SECTION 2


YES, I CAN ACCEPT THAT ASSIGNMENT!

■ Document published by The Appraisal Foundation

■ Demonstrates flexibility in both development (scope of work) and in reporting

■ Recognizes assignments other than appraisal and appraisal review


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Is a scope of work specified by the client acceptable?


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See FAQ 154

SECTION 2


From Your Perspective #21Is an appraiser allowed to perform such an assignment?


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Similar to FAQs 155 and 293; See Comment to Standards Rule 2-2.

SECTION 2


Back to Basics #8Correct Use of the Term Restricted■ Development – it does not apply; there is no

“restricted appraisal” option

■ Reporting – Use of a Restricted Appraisal Report is restricted to the client

■ This should never imply the scope of work was restricted

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From Your Perspective #22Is an inspection of the subject property always required in a

real property appraisal assignment?


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Page 44

Although worded a bit differently, this is based on FAQ 178 and the same answer applies.

SECTION 2



Is this an acceptable assignment condition?


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See FAQ 134

SECTION 2


Back to Basics #9Standards Rules may be:■ Absolute (e.g., SR 1-2)

■ Required only when necessary for credible results (e.g., SR 1-4)

■ Conditional (e.g., SR 1-5)

Some are both conditional and required only when necessary for credible results (e.g., SR 1-4(d)).

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From Your Perspective #24Would the two assignments require the same scope of

work?


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Who would be considered the appraiser’s peers in this assignment?


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From Your Perspective #26Is “subjective” an appropriate description of an appraiser’s

opinions?


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No. By definition, an appraiser is expected to perform in a manner that is objective and the ETHICS RULE requires objectivity. Credible opinions are based on relevant evidence and logic (per Comment to the Definition of credible). Opinions based on relevant evidence and logic are objective, not subjective.


USPAP provides for flexibility in reporting.Less detail might be appropriate for:

■ Appraisal for owner who is thinking of selling

■ A loan for which an evaluation is acceptable

■ Many other scenarios

Report Content Requirements

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Many reports prepared by appraisers go beyond USPAP requirements

■ Appraisal Reports (per SR 2-2(a), 8-2(a), or 10-2(a))

■ Restricted Appraisal Reports (per SR 2-2(b), 8-2(b), or 10-2(b))

■ Often due to client requirements, but sometimes, not


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What must be summarized in an Appraisal Report?

■ Information to identify the subject property, including:

❖ physical characteristics

❖ legal characteristics

❖ economic characteristics


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What must be summarized in an Appraisal Report? (continued)

■ The scope of work performed

■ Information analyzed, methods and techniques used, reasoning for opinions and conclusions, analyses of sale, etc. (per SR 1-5)


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What must be summarized in an Appraisal Report? (continued)

■ The exclusion of any approach to value must be explained

■ Support and rationale for highest and best use when such an opinion has been developed


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Each report must contain sufficient information for the intended users to understand the report properly

■ Some clients have requirements beyond USPAP compliance; for example, most lenders

■ Although an Appraisal Report might not be needed in some cases, a minimally compliant Restricted Appraisal Report might not be enough


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From Your Perspective #27Is it enough to say “cost approach not required by the client?


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No. Although the cost approach is not required by the client, the decision to develop or not develop the approach is a scope of work decision that must be made by the appraiser. See FAQ 284 for a discussion of what must be addressed in explaining the exclusion of an approach.


What must be summarized in a Restricted Appraisal Report?

■ Any analysis required by SR 1-5 (i.e., agreements of sale, etc.) must be summarized

■ Any other analysis need only be stated


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Back to Basics #10What is protected under the Confidentiality

section of the ETHICS RULE?■ Confidential information

■ Assignment results

Both are defined terms in USPAP!

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From Your Perspective #28May the appraiser use a Restricted Appraisal Report in this

case?


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See FAQ 304. Although the parties in this exercise are different from the FAQ, the answer is the same.


From Your Perspective #29May the appraiser simply add such a statement elsewhere in

the report?


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Page 50

SECTION 2

No. This question is similar to FAQ 24. Simply adding information to a report is not the same as a signed certification. Any supplemental certification should be clearly labeled as a certification and it must be signed as required by Standards Rule 2-3.


From Your Perspective #30Would that be acceptable?


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No. The Comment to Standards Rule 2-2(b)(viii), which applies to Restricted Appraisal Reports, requires a summary of the results of the analysis of any current listing in a market value appraisal.


From Your Perspective #31Can an appraiser provide more than a Restricted Appraisal

Report, but less than an Appraisal Report?


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SECTION 2

Yes. This question is similar to FAQ 299, but from a somewhat different perspective.USPAP prescribes the minimum content requirements for the report options. An appraiser is always free to add to the minimum requirements.


A Restricted Appraisal Report might be appropriate as an evaluation of real property in compliance with Interagency Guidelines

■ Development must comply with STANDARD 1

■ Report must comply with SR 2-2(b)

■ The sample reports would require additional information to meet Guidelines (See AO-13)


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May an appraisal submit a report labeled an “Evaluation Report”?


128

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SECTION 2

No. See FAQ 271


Several development Standards Rules required analyses

■ SR 1-3: Factors related to highest and best use

■ SR 1-4(a), (b), and (c): Approaches to value

Analyze and Summarize – What is Expected?

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Several development Standards Rules required analyses (continued)

■ SR 1-4(d), (e), (f), and (g): assignment-specific circumstances

■ SR 1-5(a) and (b): current agreement of sale, option, listing, and prior sale of subject


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Page 53SECTION 2


Several reporting Standards Rules required a summary of information or analyses

■ SR 2-2(a)(iii): Identity of the subject property

■ SR 2-2(a)(vii): Scope of work


131

Page 53SECTION 2


Analyze – What does It Mean?

■ Not a defined term in USPAP

■ Common definition – see Student Manual

■ Analysis is more than a reiteration of facts!


132

Page 53SECTION 2


Summarize – What does It Mean?

■ Not a defined term in USPAP

■ Per AO-11: an expanded presentation of information

■ AO-11 provides examples of information that is stated and information that is summarized


133

Page 53SECTION 2


From Your Perspective #33What might be included in a summary of physical

characteristics?


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Page 54

SECTION 2

The summary of physical characteristics typically includes maps, photographs, and building sketches. These are then supplemented by narrative discussion of conditions such as, but not limited to, atypical site factors and improvements. This might also include information related to physical deterioration and functional obsolescence.


From Your Perspective #34What might be included in a summary of legal

characteristics?


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This would typically address zoning and any other applicable land use regulations (e.g., limitations due to the presence of wetlands). This might also include private restrictions such as covenants. The relevance of some factors may vary based on the intended use of the assignment results.


From Your Perspective #35What might be included in a summary of economic

characteristics?


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Among other things, a summary of economic characteristics could include information regarding real estate taxes and any homeowner association fees. In the appraisal of a leased property, the terms and conditions of the lease are usually important factors and must be identified and summarized.


From Your Perspective #36Must the support and rationale be summarized?


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Yes. Standards Rule 2-2(a)(x) requires that the support and rationale for the highest and best use opinion be summarized in the report “when an opinion of highest and best use was developed by the appraiser.” Because the appraiser has checked the box indicating an opinion of highest and best use, a summary of support and rationale is required.


From Your Perspective #37Residential use in a residential zone – is any more rationale

needed?


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Yes. If the appraiser developed a highest and best use opinion, the report must summarize the support and rationale for that opinion. If the appraiser is using a form report, the support for the opinion is likely in the report, but the rationale for the conclusion must also be included. Given the information provided, what is the reasoning to support the conclusion?


From Your Perspective #38Is this appropriate? Why or why not?


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Yes, but with caution. Highest and best use is predicated on the physical, legal, and economic conditions as of the effective date. The appraiser must ascertain the current validity of those conditions.


From Your Perspective #39Is this an adequate summary?


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Probably not. The Comment to Standards Rule 2-2(a)(viii) requires the report include “sufficient information to enable the client and intended users to understand the rationale for the opinions and conclusions, including reconciliation of the data and approaches in accordance with Standards Rule 1-6.”


From Your Perspective #40What might be included in the summary?


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As stated in the From Your Perspective #39 exercise, USPAP requires the report “sufficient information …”

In this case, in addressing the quality and quantity of data (per Standards Rule 1-6(a)), the report should provide sufficient explanation for the selection of the comparable sales used in the analysis.


From Your Perspective #41What might be included in the summary?


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Because the report must be sufficient to enable intended users to understand the rationale, it must explain how the appraiser was able to get from the adjusted sale prices of these diverse properties to a value opinion.


From Your Perspective #42What areas exceed the minimum requirements for a

Restricted Appraisal Report?


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In the sample Non-Residential Restricted Appraisal Report in the Appendix, the Scope of Work and Reconciliation sections of the report include more than the minimum required in a Restricted Appraisal Report.


From Your Perspective #43Is that allowed under USPAP?


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Yes. Although the expression appraisal consulting is no longer used or defined in USPAP, there is no prohibition against using that terminology to describe services provided by an appraiser. ADVISORY OPINION 21 (see Illustrations 5a, 5b, and 5c) provides examples of services that had been called appraisal consulting.


Thank you!

www.appraisalfoundation.org

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Documents

National Uniform Standards of Professional Appraisal Practicevaao.org/wp-content/uploads/2018/07/USPAP_2018-19_7-Hour.pdf · Explain revisions to USPAP effective Jan 1, 2018 through