Judith Martin ISA CAPP on USPAP- Appraisals
The Uniform Standards of Professional Appraisal Practice (USPAP) is published by The Appraisal Foundation located in Washington DC. This document is re-issued every two years and is the guidelines for Appraisers and the users of Appraisals. USPAP involves real estate, personal property and business valuation.
The document is broken into nine parts. The first seven sections (Definitions, Preamble, Ethics Rule, Record Keeping, Competency, Scope of Work, and Jurisdictional Exception ) pertain to all those who use USPAP in their professional lives. The following sections are The Standards which pertain to the development of an appraisal and the reporting of the findings. The final section is the Statements which clarify, interpret, explain and elaborate the Standards.
All the parts of USPAP are important in an appraisers work. However, USPAP does not state how reports are to be written. The Standards only indicate what needs to be included in the report to be a USPAP compliant report.
The Competency Rule does not specifically set out the years of experience needed, or the depth of knowledge needed to be considered competent. It does place that responsibility on the shoulders of the appraiser as well as the person depending on the appraisal report to be certain their hired appraiser is qualified.
USPAP goes on to state ways the appraiser can make themselves competent. The Rule definitely states :
“describe, in the report, the lack of knowledge and/or experience and the steps taken to complete the consignment competently” Page U-11 (USPAP2012-2013 Edition) .
But what goes without saying is that appraisers become competent through education, education, education. Having completed the 15 hour USPAP Personal Property course does not make a qualified appraiser. This course work is only a PART of the appraiser’s education. It is vital and important that professional appraisers avail themselves to any of the fine appraisal theory and methodology courses presented by the organizations. It is also vital and important that the appraiser learn all that they can about the subject property they are involved with on a regular basis.
Another very important Rule of USPAP is the Ethics Rule. This Rule is one that is often broken when the Appraiser is also in the business of buying and selling. Nowhere in USPAP does it state that a “dealer” cannot be an appraiser or vice/versa. USPAP does state that you need to disclose this to the public. On page U-8 of the USPAP 2012-2013 Edition it clearly states in bold: If known prior to accepting an assignment, and/or if discovered at any time during the assignment, an appraiser must disclose to the client, and in the subsequent report certification:
any current or prospective interest in the subject property or parties involved; and
any services regarding the subject property performed by the appraiser within the three year period immediately preceding acceptance of the assignment, as an appraiser or in any other capacity.
USPAP goes further under the Management section of this Rule to state:
An appraiser must not advertise for or solicit assignments in a manner that is false, misleading or exaggerated.
For our particular use in this paper, one could simplify these statements as reading – if you are a buyer, than be a buyer and state you are the buyer. Do not falsely advertise or solicit appraisal business for the intent of purchasing items for your business or personal needs.
USPAP does not state that you can’t wear different hats in your business. Nor does it state in writing what specifically makes a qualified appraiser. USPAP gives a very wide berth for those who are using USPAP as a guideline in their appraisal needs. But USPAP does state very specifically over and over in every statement and every Rule – DISCLOSE, DISCLOSE, DISCLOSE. Tell your client and the reader s of your appraisal work what your levels of expertise are. Tell your client and readers what level of involvement you had in the property being evaluated. This makes for a credible report and only enhances your reputation and the reputation and professionalism of appraisers as a whole.
Judith Martin ISA CAPP
©The Perfect Thing 2013