UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP)
In response to the crisis of in the savings and loan industry, several professional
organizations in the United States and Canada decided to come together and to create a
committee and write the Uniform Standards of Professional Appraisal Practice (USPAP), which
is constituted by a series of 10 generally accepted standards ("About the appraisal Foundation,"
n.d.). The purpose of these standards was to stablish a general base of guidelines for appraising
organizations or individuals can use to generate a fair valuation current to the time of creation.
In this document, the Standard 4 will be discussed, explained, and evaluated in a possible
situation of valuation:
Standard 4 – For Appraisal Reviews and Reporting
According to the 2020-21 USPA and Guidance Material, this standard states that each
analysis must be redacted and communicated in a manner that is not misleading, so that the
report is clear to understand (Appraisal Standard Board, 2020, p. 29)
Rule 4.1 – According to this rule, no matter if the report is written or oral, it must be filed
separate from the actual work sheets; it must be redacted with clear and sufficient information
that supports the conclusion of the valuation, showing that there were no assumptions made
(Appraisal Standard Board, 2020, p. 29).
Rule 4.2 – This rule states that the appraisal should be reported appropriately according to
the intention of the appraisal. It must contain the information and identity of the client and the
reason why the appraisal was requested. Additionally, all the important details, like the date and
time of the appraisal should be indicated so that there is not a misunderstanding in any of these
matters (Appraisal Standard Board, 2020, p. 29).
Additionally, this rule also says that when the report is subject to any personal opinion
from the appraiser, there needs to be a clear indication in the report on where and what is being
reported as a personal conclusion of value, along with the date and time this opinion was given.
In accordance with rule 4.3, this needs to be submitted with a signed authentication document
(Appraisal Standard Board, 2020, p. 30).
Rule 4.3 – As mentioned above, this rule gives direction on how a certification for the
appraisal should be submitted along with the report. Even though this rule gives a suggested
verbiage on what the certification should say, it also says that the report does not have to say
strictly what the guideline says. However, it is important that the certification attests that the
information in the appraisal is true and correct, that the work has been done to the best of the
appraisers ability with no personal interest on purchasing the property valued. All opinions,
conclusions, and decisions were made based on the USPAP, and no personal bias was involved
(Appraisal Standard Board, 2020, p. 31.).
Lastly, in this rule, it is important that not only the entity that performed the appraisal
signs the certification, but also the client to whom the report is being issued to. Rule 4.3 also
suggests that a supplemental certification should be issued with any additional information
important to the client (Appraisal Standard Board, 2020, p. 31.).
Rule 4.4 – This last rule indicates that “to the extent that it is both possible and
appropriate, and oral appraisal review report must address the substantive matters set forth in
Standard 4.2” (Appraisal Standard Board, 2020, p. 31.).
This standard is mostly providing guidance on the content for the structure of the
appraisal report. It is important that individuals follow closely these instructions. Not following
them could put at risk not only the legal being of the appraisal entity, but also the integrity of the
value of the property or asset that is subjected to appraisal. To Christians, the Bible is the set of
standards that the Lord provided to follow, and further in the New Testament, Jesus says that he
will sent the Holy Spirit as the advisor to His people while he is gone. Christians should follow
God’s set of standards written in the Bible, trusting that it is God Himself that guides every step
of their lives, and counseling them with His eye upon them as it is written in Psalms 32:8 (ESV,
2001). Following the Lord’s direction will always bring success and good rewards.
References
About the appraisal Foundation. (n.d.). the appraisal Foundation.
https://www.appraisalfoundation.org/imis/TAF/About_Us/TAF/About_Us.aspx?
hkey=52dedd0a-de2f-4e2d-9efb-51ec94884a91
Appraisal Standard Board. (2020). 2020 - 2021 Uniform Standards of Professional Appraisal
Practice (2020-2021st ed.). The Appraisal Foundation.
Psalms 32:8. (2001). ESV Bible. https://www.esv.org/Psalms+32/
Aimeng,
I find very interesting what you say about the IRS in relation to the USPAP. I did not
know the IRS did not adopt USPAP, and instead created their own guidelines to follow. I can
clearly see how this can create conflict not only to the appraisers themselves, but also to the
costumers in need of an appraisal, especially when it comes to taxation matters. Personally, I
consider that with two, instead of just one, sets of appraisal standards, there could potentially be
multiple opportunities to create a wrong valuation, which could even result in a legal conflict.
You decided to talk about the rules in Standard three. I actually decided to write mine
about standard 4, which is very similar in some content to standard three. I would appreciate if
you take some time to read my post and comment on it. I agree with the fact that basic and
important data should always be present in an appraisal report; date, time, names of both the
client and the appraiser parties, and other similar information should always be present. This
part, is in fact the second rule in standard three.
I was reading the standard three in the 2020-2021 USPAP, and it is very specific on how
the person creating the appraisal review needs to understand and correctly employ the methods
and techniques in order to perform an accurate valuation (Appraisal Standard Board, 2020, p.
25). This is the very first rule of this standard; however, I did not see that you mentioned it in
your post.
To expand on my comments about the second rule in this standard, I find this rule very
long and overwhelming. Almost a little monotonous. Even though I also agree that all
hypothetical assumptions and opinions should be identified to make sure the results of the
valuation made by the reviewer are unbiased, I still think that appraisals are purely subjected to
personal observation and opinion.
Lastly, the third rule in this standard talks about how a reviewer needs to apply the
necessary methods and techniques to assign credible value to the appraisal (Appraisal Standard
Board, 2020, p. 25-27). I think it is very interesting when you say that the reviewer can disagree
with the appraiser if there is not enough information provided in the report. Yes, the opinion of
value is crucial, like you mentioned, but I also think that the party giving the opinion should also
be a part of the creation of the appraisal and not just be a last reviewer.
The Word of God teaches us that it is good to, always, be truthful. Honesty is a value that
should be in every single Christian should have. The Prophet Ezekiel, in his writings in the book
of Zechariah says that in order to always make peace, it is important that we always “speak the
truth to one another” (Zachariah 8:16, ESV, 2001). Having this value as a virtue will always
result in great rewards, especially in performing important practices like appraisals.
References
Appraisal Standard Board. (2020). 2020 - 2021 Uniform Standards of Professional Appraisal
Practice (2020-2021st ed.). The Appraisal Foundation.
Zechariah 8:16. (2001). ESV Bible. https://www.esv.org/Zechariah+8/
Michael,
Thank you so much for writing about standard 10. I have been reading some of the posts
from our classmates, and I have noticed that, in my opinion, the standards are very repetitive
with the information each one has. They all mention on how the report needs to be filed in a non-
misleading way, and how the appraiser needs to include the necessary information so that the
intention of the report is clear and explained. Even though I agree with the fact that all that
information is crucial and important for the report, I still think there is no need on repeating these
in every single standard.
When it comes to standard 10, I agree with you that rule 10-1 is very vague in what it
says. Actually, every first rule in every standard tends just to give a general introduction of what
is expected from the appraiser according to the rule. However, this standard is also specifically
for business appraisal and reporting. Also, I noticed you used he 2018-2019 edition as a
reference for your post. There is already a 2020-2021 edition already released, however for
standard 10, the changes are minimal.
Rule 10-2 talks about the content the report should have specifically for a business
appraisal. This long rule sets a very specific guideline on how the report should look like, and
what it should contain. Once again, being clear with the intention of the appraisal, and
mentioning the general information of the report is mentioned in this rule (Appraisal Standard
Board, 2020, p. 54-56). Like you mentioned, I also see that the text also mentions that some
businesses will request not only a business appraisal, but also a restricted appraisal report.
Just like in other reports for other matters, rule 10-3 redacts a clear suggestion on how to
adjunct a certification to the report. This rule gives a suggested text that appraisers can use in
order to have a proper certification verifying not only the veracity of the content in the report, but
also verifying the information of the appraiser and the client (Appraisal Standard Board, 2020, p.
54-56). I see that you also mentioned how this standards clearly says that all opinions and
conclusions need to be pointed out for the reviewer to know what was concluded in a subjective
level, and how the signature could even determine whether the appraisal could be take to court or
not. I am amazed, yet not surprised, on how a signature of verification is such an important part
of this type of reports, that It could even be taken to legal levels of importance.
In my opinion, appraisals are subject to personal opinion. Even though there is a set of
standards (USPAP), I still believe that the report will be performed at the level of interpretation
of the appraiser. This is why it is so important to be wise in how and when to give our opinion.
As Christians, the Bible is the source of wisdom and the set of standards we need to follow. King
Solomon says that a wise man is wise when he or she holds back in giving an opinion instead of
letting it out foolishly (Proverbs 29:11, ESV, 2001). I believe that even in the business valuation
world, sometimes it is better to remain quite than to be sporadically talking and giving opinions
without thinking about the consequences.
References
Appraisal Standard Board. (2020). 2020 - 2021 Uniform Standards of Professional Appraisal
Practice (2020-2021st ed.). The Appraisal Foundation.
Proverbs 29:11. (2001). ESV Bible. https://www.esv.org/Proverbs+29/
Powered by TCPDF (www.tcpdf.org)
