Application of Appraisal Reporting Requirements
Question: If an appraiser is bound by USPAP for a particular assignment, when must the appraiser comply with the USPAP appraisal reporting requirements?
Response: Whenever a value opinion is communicated, compliance with USPAP’s appraisal reporting requirements is required. It may seem obvious in many cases that an appraiser must abide by the appraisal reporting requirements. However, in other cases it is not as obvious, such as the following examples:
-Selecting and providing a client with comparable sales for a known property is an appraisal assignment as defined by USPAP.
-Informing a property owner that their property tax assessment is too high is an appraisal report as defined in USPAP
-Providing an opinion of market rent is an appraisal report as defined in USPAP.
-Providing an opinion of the most probable selling price for a homeowner is an appraisal report as defined in USPAP.
-Preparing, analyzing and communicating the results of an automated valuation model (AVM) for a property is an appraisal assignment.
It is important to remember that the applicability of USPAP is not affected by the amount or the lack of a fee.
Multiple Intended Uses in the Same Appraisal Report
Question: May I perform an appraisal with multiple intended uses and communicate the results in a single report with a single valuation and be in compliance with USPAP? All of the intended uses have the same type and definition of value and were performed with the same scope of work.
Response: Yes. USPAP requires the appraiser to identify the intended use of the appraisal opinions and conclusions. USPAP requires that the report states the intended use of the appraisal.
Intended use is defined as: The use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment. (bold added for emphasis by AF)
Therefore an assignment may have multiple intended uses with a single value opinion in the same report as long as the uses have the same definition of value and the same scope of work. An example with multiple intended uses with the same type and definition of value and same scope of work could include a market value appraisal being prepared for a possible donation and being prepared for a possible sale.
It should be noted that there are many circumstances when appraisers provide multiple value opinions in a single report with multiple intended uses (such as for market value, liquidation value and insurable value all in the same report). In this example, each intended use has a different type and definition of value, different scope of work, and likely will have differing conclusions.
The USPAP Q&A is posted each month on The Appraisal Foundation website. The ASB compiles the monthly USPAP Q&A into the USPAP Frequently Asked Questions (USPAP FAQ) for publication with each edition of USPAP. In addition to incorporating the most recent questions and responses issued by the ASB, the USPAP FAQ is reviewed and updated to ensure that it represents the most recent guidance from the ASB. The USPAP Frequently Asked Questions can be purchased (along with USPAP and USPAP Advisory Opinions) by visiting the “Foundation Store” page on The Appraisal Foundation website.