Can You Do a Particular Assignment per USPAP??
Yes, I can Accept That Assignment! Types of assignments…
The Appraisal Foundation, via John Brenan, has released the following, showing which portions of USPAP apply to particular assignments.
This involves the applicable Standards and Rules.
You may want to print the PDF posted below and keep it under your pillow, or at least with your copy of USPAP!
Yes, I can Accept That Assignment! USPAP Flexibility at a Glance
Some appraisers may not be aware of the inherent flexibility built into the Uniform Standards of Professional Appraisal Practice (USPAP). Because USPAP is a set of standards that is built on the basic principles of ethics and competency, those who do not appreciate such flexibility can sometimes view USPAP as vague. However, the scope of work concept in USPAP enables appraisers to perform many types of assignments while maintaining compliance with standards. Following are examples of such flexibility:
|Assignment Types||Some Examples||Allowed by USPAP?||How Does USPAP Apply?|
|Oral Appraisal Reports||A client does not require a written report||Yes||STANDARDS 2, 8, 10|
|Purchase Price Negotiation||A potential buyer is considering purchasing a property or business||Yes||STANDARDS 1 & 2, 7 & 8, 9 & 10|
|Calculation Engagement||A CEO is considering an acquisition and wants to know the calculated result given a specific valuation method||Yes||STANDARDS 9 & 10|
|Consulting/Appraisal Consulting1||A client is considering developing a vacant parcel and is looking for maximum return||Yes||Advisory Opinion 21|
|Appraisals for Litigation/Expert Witness Testimony||An attorney needs an impartial opinion of value for legal proceedings||Yes||STANDARDS 1 & 2, 6, 7 & 8, 9 & 10|
|Evaluations2 for Lending||A lender needs an evaluation providing an opinion of value to ensure a loan is adequately collateralized||Yes||STANDARDS 1 & 2 and Advisory Opinion 133|
|Appraisals for lending||A lender needs an appraisal providing an opinion of value to ensure a loan is adequately collateralized||Yes||STANDARDS 1 & 2, 7 & 8|
|Appraisal Review||A client needs to know whether or not an appraisal is credible||Yes||STANDARD 3|
|Appraisals for Charitable Contributions||An individual donating real or personal property requires a qualified appraisal performed by a qualified appraiser4||Yes||STANDARDS 1 & 2, 7 & 8|
|Appraisals for Estates||An executor needs to know the value of property in order to equitably settle an estate; an executor needs to know the Fair Market Value to pay estate taxes||Yes||STANDARDS 1 & 2, 7 & 8, 9 & 10|
|Appraisals for Insurance||A property owner wants to know how much insurance coverage is adequate; a property owner needs an independent appraisal to help settle a damage/loss claim||Yes||STANDARDS 1 & 2, 7 & 8|
|Advocacy||An individual who is an appraiser is asked to represent one party in a court proceeding||Yes (see footnote)||ETHICS RULE and Advisory Opinion 215|
|Assessment Appeals||An appraiser is asked to work for a property owner in an assessment appeals hearing||Yes (see footnote)||ETHICS RULE and Advisory Opinion 216|
|Contingent Fee||An appraiser agrees to be compensated for the appraisal only when the loan closes||No||Management Section, ETHICS RULE|
As illustrated in the preceding chart, USPAP provides tremendous flexibility for appraisers. The SCOPE OF WORK RULE in USPAP requires appraisers to produce credible assignment results, but USPAP requires only those analyses that are necessary for credible results, given the intended use. In assignments performed for real property, personal property, or business valuation/intangible assets, USPAP also includes provisions for an abbreviated reporting format.7
In order to protect public trust, USPAP does not permit assignments where an appraiser’s fee is contingent on the outcome, or on a subsequent event directly related to the appraiser’s opinions.8
- Appraisal consulting is no longer defined in USPAP and the Real Property Appraisal Consulting Standards were retired; however, those services formerly called appraisal consulting are still permitted under USPAP.
- As defined in the Interagency Appraisal and Evaluation Guidelines, December 2010.
- Advisory Opinion 13, Performing Evaluations of Real Property Collateral to Conform with USPAP, provides guidance on this topic.
- Internal Revenue Service, Publication 561.
- An individual may provide services as an advocate, or as an appraiser (one who expected to perform in a manner that is independent, impartial, and objective); however, one cannot act in both roles in the same assignment. When acting as an advocate, the individual must not misrepresent his or her role.
- Appraisers may perform assignments for assessment appeals, but cannot do so if the fee is based on a percentage of the cost savings or other events as stated in the Management section of the ETHICS RULE. Appraisers must also ensure they do not misrepresent their role in such assignments.
- Restricted Appraisal Reports are allowed under STANDARDS 2, 8 and 10.
- Management section of the ETHICS RULE.
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Great content, thank you. Would like to see something else like this pertaining specifically to the differences between an evaluation and a price opinion type of reporting approach. The difference is perhaps in the realm of semantics, but the choice of form is where the rubber hits the road.
I’m still a bit confused regarding appraisal consulting. Although retired, is it still considered appraisal practice ?