Alternative Valuation Products & USPAP
Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice
The Appraisal Foundation has drafted a white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).
The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.
All interested parties are encouraged to comment in writing before the deadline of December 31, 2013. Send comments to TA…@appraisalfoundation.org.
In the appraisal industry, particularly the residential mortgage sector, there has been a proliferation of products and processes attempting to provide alternatives to “traditional” appraisals in recent years. The primary factors behind development of these Alternative Valuation Products (AVPs) are generally to reduce cost and improve timeliness.
For many years appraisers heard tales of someday being replaced by a “black box” that could determine the value of a property without the judgment that an appraiser may bring. In fact, to some extent this has come to pass with products that exist and are in use today, such as Automated Valuation Models (AVMs). Interestingly, however, there are many cases where an appraiser’s training, experience and expertise are necessary to provide a credible analysis and, ultimately, opinion of value.
This paper will attempt to: identify a number of the products being used today as alternatives to an appraisal; describe who uses these alternative products and why; discuss who performs assignments utilizing alternative products; and examine these products in light of the Uniform Standards of Professional Appraisal Practice (USPAP).
While this document is neither intended to be an exhaustive study of all AVPs, nor a thorough examination of their overall impact in the collateral valuation marketplace, it is hoped that this paper can be an aid to understanding AVPs and why they are being used. It is our belief that a USPAP-compliant appraisal completed by a competent and ethical appraiser remains the “gold standard,” incorporating relevant data and the analytical expertise provided by an appraiser. However, we fully recognize that AVPs play an important role in the valuation marketplace, and we would be remiss not to examine that role in a meaningful manner.
White Paper on Alternative Valuation Products