2020-2021 USPAP Update
On January 1, 2020, changes to the USPAP document and related guidance became effective. While many of the changes have little impact on appraiser’s day-to-day practice, other changes may have a significant impact. In any case, appraisers are responsible for being aware of and incorporating the changes as of 1/01/2020 even though they may not yet have completed the 2020-2021 National 7-Hr USPAP Update Course. This update is meant to help update appraisers prior to completion of the USPAP Update course.
See below for a summary of the 2020-2021 changes...
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Summary of 2020-2021 USPAP Changes
Introduction
On January 1, 2020, changes
to the USPAP document and related guidance becomes effective. While many
of the changes have little impact on appraiser’s day-to-day practice,
other changes may have a significant impact.
In any case, appraisers are
responsible for being aware of and incorporating the changes as of
1/01/2020 even when they have not yet completed the 2020-2021 National
7-Hr USPAP Update Course.
Below is a summary of the changes
provided by the ASB (some
formatting was changed for emphasis).
Revisions to
the Standards regarding reporting options and Comments in Standards
Rules
The
Board adopted revisions to
permit additional intended users besides the client for Restricted
Appraisal Reports, as long as the other intended users are named in
the report (i.e., not merely identified “by type”). The second adopted
change for Restricted Appraisal
Reports is a simplification of warning language that will no longer
include a reference to the appraiser’s workfile.
The
Board also adopted revisions to Standards Rules 2-3 and 4-3 to address
situations where an assignment requires the use of a certification that
does not include all of the certification elements in the respective
Standards Rule. In such cases an appraiser is required to include a
supplemental certification, which includes the remaining required
certification elements. Notably, the Board is also clarifying that such
supplemental certifications do not require signature by the
appraiser(s). The Board also
adopted revisions to enumerate and clarify the minimum level of
reporting necessary under the reporting requirements for an
Appraisal Report in STANDARDS 2, 8, and 10. The Board
voted to delete some Comments that had redundant requirements clearly
stated elsewhere, and to incorporate other Comments directly into the
Standards Rules. In some cases, Comments were retained to provide
interpretation and/or establish the context and conditions for the
application of Standards Rules. The
Board also adopted labels for each Standards Rule in order to make it
easier for users to locate specific rule content in the document.
Revision of
SCOPE OF WORK RULE
The
Board adopted revisions to
add
language to the Disclosure Obligations section of the SCOPE OF WORK RULE
to address the flexibility afforded the appraiser in the disclosure of
scope of work.
Revisions to
COMPETENCY RULE
The Board revised the “Perfection
is impossible to attain...” Comment in Standards Rules 1-1, 3- 1, 5-1,
7-1, and 9-1, and moved it into to the COMPETENCY RULE.
Moving the Comment into the COMPETENCY RULE reduces duplication and, at
the same time, broadens the applicability since the COMPETENCY RULE
applies to both development and reporting in all disciplines.
Revisions to
DEFINITIONS
The
Board adopted some modifications and additions to the DEFINITIONS in
order to help readers better understand USPAP. The Board adopted
changes to the definitions of APPRAISAL, APPRAISAL PRACTICE, APPRAISAL
REVIEW, APPRAISER, ASSIGNMENT CONDITIONS, ASSIGNMENT RESULTS, CLIENT,
COST, EXPOSURE TIME, MARKET VALUE, PERSONAL PROPERTY, REAL PROPERTY,
VALUATION SERVICE, VALUE and WORKFILE.
The
Board also adopted
new definitions for the terms ASSIGNMENT
ELEMENTS, EFFECTIVE DATE, MISLEADING, PERSONAL INSPECTION, PHYSICAL
CHARACTERISTICS, and RELEVANT CHARACTERISTICS, to help clarify how each
term is used in USPAP.
Other Edits to
Improve Clarity and Enforceability of USPAP
The Board
adopted changes related to the phrases “accept an assignment”
and “intangible items.” The edits are intended to improve
clarity and consistency.
Revisions to
ADVISORY OPINION 1, Sales History
The
Board adopted revisions to
Advisory Opinion 1, Sales History, to provide additional detail and
illustrations related to an appraiser’s obligation to analyze the
listing, contract, and sales history of the subject property.
Revisions to
ADVISORY OPINION 2, Inspection of Subject Property
The
Board adopted revisions to
Advisory Opinion 2, Inspection of Subject Property, to provide guidance
and illustrations reflecting changes in the marketplace related to an
appraiser’s inspection of a property.
Revisions to
ADVISORY OPINION 3, Update of a Prior Appraisal
The
Board adopted revisions to
Advisory Opinion 3, Update of a Prior Appraisal, to clarify an
appraiser’s obligations regarding confidentiality when performing an
update of an appraisal using the “incorporate by reference” option.
Revisions to
ADVISORY OPINION 28, Scope of Work Decision, Performance, and Disclosure
The
Board adopted revisions to Advisory Opinion 28, Scope of Work
Decisions, Performance, and Disclosure, including a
new
Illustration 2 regarding a scope of work problem related to tangible
personal property, and adding an additional illustration regarding a
scope of work problem related to real property.
Revisions to
ADVISORY OPINION 31, Assignments Involving More than One Appraiser
The
Board adopted revisions to Advisory Opinion 31, Assignments
Involving More than One Appraiser,
to help clarify guidance related
to significant appraisal assistance and Standards Rules 2-3, 4-3,
6-3, 8-3, and 10-3.
Revisions to
ADVISORY OPINION 32, Ad Valorem Property Tax Appraisal and Mass
Appraisal Assignments
The
Board adopted revisions to Advisory Opinion 32, Ad Valorem
Property Tax Appraisal and Mass Appraisal Assignments, that adds a new
Illustration 5 on the topic of an appraiser’s obligations
regarding the quantity and quality of factual data collected in a mass
appraisal assignment.
Revisions to ADVISORY OPINION 36,
Identification and Disclosure of Client, Intended Use, and Intended
Users
The
Board adopted revisions to Advisory Opinion 36, Identification
and Disclosure of Client, Intended Use, and Intended Users, to
clarify an appraiser’s requirement to make a proper disclosure of the
client and any other intended users in an Appraisal Report or Restricted
Appraisal Report, particularly in cases where the client has requested
anonymity in the report.
Creation of ADVISORY OPINION 38, Content of
an Appraisal Report and Restricted Appraisal Report
The
Board adopted newly-created Advisory Opinion 38, Content of an
Appraisal Report and Restricted Appraisal Report. The new Advisory
Opinion
compares the reporting requirements under the
revised Appraisal Report and Restricted Appraisal Report options, and
replaces the prior guidance offered in Advisory Opinions 11 and 12.
Retirement of
ADVISORY OPINION 4, Standards Rule 1-5(b); ADVISORY OPINION 11, Content
of the Appraisal Report Options of Standards Rules 2-2, 8-2, and 10-2;
and ADVISORY OPINION 12, Use of the Appraisal Report Options of
Standards Rules 2-2, 8-2, and 10-2
The Board adopted the retirement of
Advisory Opinions 4, 11, and 12.
Advisory Opinion 4 was
narrowly-focused, and was more appropriately housed where it also
currently exists in the USPAP Frequently Asked Questions. As stated
above, Advisory Opinions 11 and 12 have been replaced with the
newly-created Advisory Opinion 38, Content of an Appraisal Report and
Restricted Appraisal Report. Additional
administrative edits will be made to other Advisory Opinions and FAQs
for consistency with the adopted changes.
Click here for detailed (128 page) Summary of Actions. You can
also access the
Discussion Draft &
Comments,
First Exposure Draft &
Comments,
First Exposure Draft of Advisory Opinions &
Comments,
Second Exposure Draft &
Comments,
Third Exposure Draft &
Comments, and the
Fourth Exposure Draft &
Comments by clicking on them. More information on the actions
of the ASB can be found on The Appraisal Foundation’s website
www.appraisalfoundation.org.
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Summary of 2018-19 USPAP Changes
Below is our summary of the changes in 2018-2019 USPAP document and related guidance. While there are some noteworthy changes, most will NOT have a significant impact on Appraisers. Many changes were made for the sake of clarity and consistency. Please take note of the NEW examples in Advisory Opinion 1. They provide excellent guidance regarding the analysis of contracts, prior sales and listings. As always, feel free to email me at brian@AffiliatedAppraisersWorkshop.com with any questions or concerns.
Happy & Prosperous 2018!
-Brian Mathews
New definitions of some terms were added, and others were revised or deleted in the upcoming edition of USPAP. Items added are underlined and items removed are shown in strikethrough text. REPORT (Revised): any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client or a party authorized by the client upon completion of an assignment.
ASSIGNMENT
(Revised): ASSIGNMENT CONDITIONS (New): Assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations, jurisdictional exceptions, and other conditions that affect the scope of work. Comment: Laws include constitutions, legislative and court-made law, administrative rules, and ordinances. Regulations include rules or orders, having legal force, issued by an administrative agency.
INTENDED USE
(Revised): the use(s)
INTENDED USER
(Revised): the client and any other party as
identified, by name or type, as users of the review report by the
appraiser, based on
EXTRAORDINARY
ASSUMPTION (Revised): an assignment-specific assumption,
Comment:
APPRAISAL
REVIEW (Revised): (noun) the
act or process of developing Comment: The subject of an appraisal review assignment may be all or part of a report, workfile, or a combination of these.
ETHICS RULE- Edits made to the ETHICS RULE and the RECORD KEEPING RULE address the communication of assignment results. As put forth in the Third Exposure Draft, the ASB did not adopt revisions related communications of assignments results prior to the completion of the assignment other than the ethical and record keeping requirements that appear in that section. Although there was support for specifically addressing draft reports, the ASB also learned that there were significant unintended consequences that might occur with the adoption of any such requirements. Conduct Section
The edits are intended to improve consistency with the other development and reporting standards. Because STANDARD 4 was vacant after retirement of a prior Standard, it made sense to divide the current Appraisal Review standard into two parts to make it more consistent with other USPAP Standards.
The edits are intended to improve consistency with the other development and reporting standards. Because STANDARD 5 was also vacant after retirement of a prior Standard, it made sense to divide the current Mass Appraisal standard into two parts to make it more consistent with other USPAP Standards.
The ASB adopted revisions to Standards 7 & 8 and removed the term market value from the personal property development and reporting standards, in order to clarify that certain requirements are not limited to market value assignments but are required whenever necessary for credible assignment results.
The ASB adopted revisions to the personal property certification in Standards Rule 8-3 to allow personal property appraisers, in assignments involving different types of specialties, to sign the certification without making them accountable for the assignment results of items which they did not appraise.
The ASB adopted the addition of a new graphic in Advisory Opinion 21, USPAP Compliance, and it will replace the chart beneath the longstanding “ovals.” The new chart better illustrates the relationship between Valuation Services and Appraisal Practice.
The Board created Advisory Opinion 37, Computer Assisted Valuation Tools, as proposed in the Third Exposure Draft. The new Advisory Opinion addresses an appraiser’s obligations when relying upon adjustments, trend analyses, or other information generated by software or various online services.
The Board adopted revisions to Advisory Opinion 31, Assignments Involving More than One Appraiser to help clarify guidance related to significant appraisal assistance and added the language below.
Significant Professional Assistance
"USPAP does not define what constitutes significant appraisal assistance
in an appraisal or appraisal review assignment. To be significant, the
assistance provided must be substantial enough to have affected the
development of the assignment results. Assistance is related to the
appraisal process and requires appraisal competency. Therefore, only
those acting as an appraiser sign the certification, or are identified
as providing significant appraisal assistance in the certification.
Examples of significant appraisal assistance include, but are not
limited to, identification (research and selection) of comparable
properties and data, inspection of the subject property and comparable
properties, estimating accrued depreciation, or forecasting income and
expenses.
An appraiser often uses assistance that does not constitute significant
appraisal assistance. Although it is the responsibility of the appraiser
to determine the role of any individual providing assistance, tasks such
as, but not limited to, writing down measurements the appraiser provides
when measuring a structure, taking photographs of the subject property,
and providing clerical duties are not considered significant appraisal
assistance.
An appraiser providing assistance must comply with those parts of USPAP
that apply to the assistance that he or she provides. So, for example,
if an appraiser’s assistance includes only developing a cost approach in
a real property appraisal assignment, that appraiser must comply with
the applicable Rules (i.e., the ETHICS RULE, etc.),
Standards Rules 1-1, 1-3, 1-4(b) and any other applicable sections of
Standards Rule 1-4, and Standards Rule 1-6(a).
The ASB adopted revisions to Advisory Opinion 1, Sales History, to help clarify guidance related to an appraiser’s proper analysis and reporting related to a subject property’s prior and pending sales and current listings. The Board added many helpful examples that illustrate expectations with regard to the analysis of contracts, listings and prior sales. Read AO1 (Scroll to Page 69)
The ASB adopted revisions to Advisory Opinion 32, Ad Valorem Property Tax Appraisal and Mass Appraisal Assignments, to reflect the adopted changes to STANDARDS 5 and 6.
Summary of 2016-17 USPAP Changes
There are some significant changes in 2016-2017 USPAP that will affect Appraisers:
-
A revision was made
to clarify that appraisers/reviewers
“must
retain true copies of ALL written reports in the
workfile.” Don’t overwrite those pdf’s –
save a copy of every generation of the report
delivered to the Client.
-
Edits were
made to clarify that “data and
information” (in addition to
documentation) may be included in the workfile, by referring to its
location elsewhere. This
includes items of which the appraiser may not have physical custody.
Note: While the Forward to the 2016-17 USPAP Document and other related material refer to “Revisions to the DEFINITION of “Report” and to the RECORD KEEPING RULE” (bold added for emphasis), changes to the definition of Report were not adopted.
Revisions were made that eliminate the
requirement to identify and report the effective
date of an appraisal review.
Three dates
are still required to be reported in an
appraisal review in order to identify the
perspectives of the original appraiser and the
reviewer.
The 2016-17
requirements:
-
Identify the effective date of the opinions
or conclusions in the work under review
-
Identify the report date (signature date) of
the report under review - State the date of the appraisal review report
Changes were made to
the “Assignment Results” definition in order to
make clear that
appraisers may share
non-confidential information with other
appraisers.
This is meant
to facilitate higher-quality appraisals by
allowing the exchange of information.
The language specifically states
“Physical characteristics are not ASSIGNMENT RESULTS.” Additionally, the ASB
added two paragraphs to the Confidentiality Section of the ETHICS RULE
to help ensure that anyone who may have access to confidential
information or assignment results is made aware of the prohibitions on
disclosure of such information or results.
The new language says this: “An
appraiser must take reasonable steps to safeguard access to confidential
information and assignment results by unauthorized individuals, whether
such information or results are in physical or electronic form.” “An
appraiser must ensure that employees, co-workers, sub-contractors, or
others who may have access to confidential information or assignment
results, are aware of the prohibitions on disclosure of such information
or results.”
The ASB adopted language similar to what was
previously included in Statement #9 requiring
that anytime the Client’s identity is withheld
from the Report, the Appraiser must retain the
Client’s name in the workfile and state in the
report that the Client’s name was withheld at
the request of the Client. The requirement
applies to all Reporting Standards in USPAP,
whether or not the report is an Appraisal Report
or a Restricted Appraisal Report.
“State the identity of the client, unless the client has specifically
requested otherwise; state the identity of any intended users by name or
type;” “Comment: An appraiser must use care when identifying the client to avoid violations of the Confidentiality section of the ETHICS RULE. If a client requests that the client’s identity be withheld from the report, the appraiser may comply with this request. In these instances, the appraiser must document the identity of the client in the workfile and must state in the report that the identity of the client has been withheld at the client’s request.”
Past editions of
USPAP required that the Appraiser develop an
opinion of “Reasonable Exposure Time” whenever
“exposure time” was a component of the value
definition being utilized in the assignment.
There may be
times when exposure time (but not “reasonable”
exposure time) may be a component of the value
definition, and in those cases it would not be
consistent or logical to develop an opinion
regarding “reasonable exposure time” as the
opinion about exposure time should be consistent
with the value definition. The revised
comment is this: “Comment: When reasonable exposure time is a component of the definition for the value opinion being developed, the appraiser must also develop an opinion of reasonable exposure time linked to that value opinion.”.
Because of their location after STANDARD 10,
many appraisers completely forgot about the
existence of the STATEMENTS.
Also, the ASB
felt that much of the material was actually
“guidance” and not USPAP “requirements.” For
these reasons, and to make the document more
user-friendly, any actual “requirements” were
move to other (more appropriate) locations
within USPAP, and the material considered
“guidance” was reissued as new Advisory Opinions
(see below).
Material from the retired STATEMENTS, which was
considered to be “guidance” was reissued in the
form of new or revised Advisory Opinions.
Additionally,
some of that material was updated to reflect
current practices and terminology.
The changes
consist of…
·
Revisions to ADVISORY OPINION 7:
Marketing Time Opinions
·
Creation of ADVISORY OPINION 33:
Discounted Cash Flow Analysis
·
Creation of ADVISORY OPINION 34:
Retrospective and Prospective
Value Opinions
·
Creation of
ADVISORY OPINION 35:
Reasonable Exposure Time in Real and Personal
Property Opinions of Value
·
Creation of
ADVISORY OPINION 36:
Identification and Disclosure of Client,
Intended Use, and Intended Users Edits were made to USPAP and all guidance material in including other ADVISORY OPINIONS and FAQ’S, as appropriate, in order for this material to reflect the changes above. The details of all changes can be found on The Appraisal Foundation’s website in a document entitled 2015 Summary of Actions Related to Proposed USPAP Changes.
Brief Review of 2014-2015 USPAP Revisions
The changes that will likely affect appraisers on "day 1" of the new USPAP cycle, are the revisions to the Report Options under STANDARDS 2 and 8. The Self-Contained Report & Summary Appraisal Report options will be eliminated and replaced with the new Appraisal Report option. The new Standard prescribes the minimum level of reporting necessary in an Appraisal Report. It then becomes the appraiser's responsibility to determine whether greater "detail or explanation" is required based on the Intended Use and the Intended User(s) of the report. The minimum standards for an Appraisal Report are generally similar to the requirements for a Summary Appraisal Report, and this option must be used:
The "key date" for these changes is the Report Date (signature date). If the report is signed on or after January 1st, 2014, the new report options must be used. This includes reports revised or corrected after January 1st, as the Certification must be signed on the revision/report date. Read 2014-15 USPAP Q&A 2014-06 (Applicable Edition of USPAP) for more info...
Other labels may be used in addition to the USPAP Report Option labels, however, care should be taken to avoid confusion and it may be good practice to refrain from using the pre-2014 labels whenever possible. When utilizing Form Reports (such as the URAR) with the label "built-in" to the form, there may be no way to delete the "Summary Appraisal Report" label from the form, but it should be viewed as an unnecessary [2nd] label and the USPAP "Appraisal Report" label should be prominently displayed somewhere near the beginning of the report. Simple revisions to the forms (by the GSE's and software companies) could easily make this issue irrelevant, but there is no telling if that will get done by January 1, 2014 (or at all).
For form reports that cannot be changed, it is our opinion that relying on the fact that the phrase "Summary Appraisal Report" includes the words "Appraisal Report" is NOT adequate to properly identify the report option used and the term Appraisal Report should be prominently displayed by itself or within a longer identifying sentence. We suggest something to the effect of "Appraisal Report; Prepared in Accordance with USPAP Standards Rule 2-2(a)" or "This report was prepared in accordance with the requirements of the Appraisal Report option of USPAP." Just the sentence "This is an Appraisal Report" may appear odd to the eye of the "untrained" reader, as it might seem to be "stating the obvious."
The Restricted Use Appraisal Report option was renamed Restricted Appraisal Report and clarifications were made that make clear it can only be used when the Client is the only Intended User of the report. Although the minimum level of reporting may be less than that required in an Appraisal Report, the appraiser's opinions and conclusions MUST be understood, even though the rationale for how the appraiser arrived at the opinions and conclusions may not be understood.
Additional edits were made in STANDARDS 2 and 8 for consistency and clarity. Advisory Opinions 11 and 12 were also revised in order to be consistent with the new report option labels.
In all Standards that address reporting requirements, except Standard 3, there is a requirement to indicate the report date (signature date). Standards Rule 3-5(e) was revised to be consistent with other reporting standards and it now states:
"state the effective date of the appraisal review and the date of the appraisal review report;"
Underlined phrase was added for 2014-2015.
The ASB has retired these two STANDARDS out of a concern for "the clarity, understandability, and enforceability of USPAP." Requirements previously associated with these STANDARDS will be covered under other STANDARDS, such as STANDARDS 1 AND 2 (if the consulting assignment includes one or more value conclusions), STANDARD 3 (if there are opinions about the quality of other appraisers work), or may be covered (as Appraisal Practice) by other RULES such as the COMPETENCY RULE or the ETHICS RULE.
Advisory Opinion 21 has been revised for consistency and to better address assignments where appraisers provide services other than Appraisal or Appraisal Review.
The COMPETENCY RULE requires that an appraiser be competent to perform the assignment, or acquire the necessary competency to perform the assignment, or to withdraw from the assignment. However, the COMPETENCY RULE did not expressly require the appraiser to perform competently in the given assignment. This sentence was added to the first paragraph of the COMPETENCY RULE:
"In all cases, the appraiser must perform competently when completing the assignment."
- Assignment Results: The edits adopted clarify that assignment results include opinions or conclusions and the assignment results are not specifically limited to the value conclusion in an appraisal assignment, or to the final opinion of the quality of another appraiser’s work in an appraisal review assignment. The new definition is... ASSIGNMENT RESULTS: An appraiser’s opinions or conclusions developed specific to an assignment. Comment: Assignment results include an appraiser’s: - opinions or conclusions developed in an appraisal assignment, not limited to value; - opinions or conclusions developed in an appraisal review assignment, not limited to an opinion about the quality of another appraiser’s work; or - opinions or conclusions developed when performing a valuation service other than an appraisal or appraisal review assignment .- Scope of Work: The SCOPE OF WORK RULE only applies to appraisal and appraisal review assignments, whereas the term "scope of work" is broadly defined to include all assignments performed under appraisal practice.
SCOPE OF WORK: the type and extent of research and analyses in an appraisal or appraisal review assignment.
The ETHICS RULE, which applies to all assignments within appraisal practice, requires disclosure of any current or prospective interest in the subject property and any services provided (regarding the subject property) that were performed by the appraiser in the three years immediately preceding acceptance of the assignment. This disclosure must be made both prior to accepting the assignment and “in the subsequent report certification.”
The ASB adopted the following revisions (with deletions shown in strikethrough and additions shown in underscore text as follows):
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
- 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. Comment: Disclosing the fact that the appraiser has previously appraised the property is permitted except in the case when an appraiser has agreed with the client to keep the mere occurrence of a prior assignment confidential. If an appraiser has agreed with a client not to disclose that he or she has appraised a property, the appraiser must decline all subsequent assignments that fall within the three year period. In assignments in which there is no report, only the initial disclosure to the client is required. The rest of the Conduct section of the ETHICS RULE will remain as previously published.
An individual who at times works as an appraiser, and at other times works in other roles such as a consultant, broker, or investment advisor, performs an array of services for a variety of clients raising questions of when specific USPAP Rules and Standards apply. The distinction of when one is acting as an appraiser and when one is not is important to understanding the foundational obligations under USPAP. Furthermore, when one is acting as an appraiser, it is important to understand what activities fall under what section of USPAP. If governed by a jurisdiction’s mandatory USPAP adherence, must an individual acting as an appraiser adhere to the ETHICS RULE before being engaged in an assignment? Which Rules (i.e., ETHICS RULE, SCOPE OF WORK RULE, etc.) must an appraiser adhere to for an assignment of an appraisal or appraisal review with additional opinions? The revisions made to the PREAMBLE are intended to address these questions.
Brief review of 2012-2013 USPAP Revisions
There were also changes in 2012 that affected Appraisers:
While USPAP has always required that appraisers develop an opinion of "reasonable exposure time" whenever it was relevant to the value definition (i.e. market value), appraisers were not necessarily required to report the opinion of EXPOSURE TIME.
The new requirement is that appraisers report the EXPOSURE TIME in the appraisal, anytime it is developed (and it MUST be developed when it is relevant to the definition of value).
Bottom line: We are now required to report EXPOSURE TIME when estimating market value.
Remember, EXPOSURE TIME is NOT the same as "Marketing Time." Most appraisers already include an estimate of "marketing time" (especially when completing "form reports" that require a checkbox), so this will require the addition of specific statements to indicate the appraiser's opinion of the reasonable EXPOSURE TIME that was developed in the process of estimating Market Value.
The ASB has added a definition of EXPOSURE TIME to the USPAP document (see new Definitions below).
While Exposure Time and Marketing Time may frequently be a similar number, it is important to clearly understand the difference - there are times when these estimates may be substantially different.
Exposure time is a "retrospective" opinion, looking back (from the effective date) to the beginning of the "hypothetical" process of selling the asset, so that the sale would have beenconsummated on the "effective date" of appraisal.
While marketing time is a "forward looking" estimate (from the effective date), to estimate the amount of time it might take a seller (sometimes the Intended User of the appraisal), to market and sell the asset.
The existing requirement to disclose any prior services, if performed in the preceding 3 years, has been "upgraded" and now requires certification whether you have OR HAVE NOTperformed any services in the preceding 3 years. Some Clients have required this since 2010, but it was not required by USPAP. We recommend the following language be inserted into your report certification.
I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.
With regard to residential "form reports" that won't allow changes to the certification, it will be necessary to include a "supplemental certification" page. Some of the software providers have already designed a supplemental certification form that can be added to form reports, in order to help with compliance, or you can create your own, however, be careful to use an addendum page which includes date and signature as both of these items must be included in a "certification."
CLIENT: the party or parties who engage, by employment or contract, an appraiser in a specific assignment.
EXPOSURE TIME: estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.
EXTRAORDINARY ASSUMPTION: an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions.
Comment:
Hypothetical conditions are contrary to known
facts about physical, legal, or
Moves most of the requirements, related to Record Keeping, from the ETHICS RULE to the new RECORD KEEPING RULE. This was done so that minor record keeping infractions would not be viewed, by the state regulatory agencies, as "ethical" violations, however, the ETHICS RULE still prohibits "willfully and knowingly" violating the RECORD KEEPING RULE.
Advisory Opinion 21 was significantly updated and edited to include more current examples and to reflect other recent USPAP changes.
STANDARD 7 was significantly changed to reflect current practice in the personal property appraisal discipline. STANDARD 8 was edited to reflect these and other changes in the USPAP document. If you appraise personal property, we recommend a complete review of these revised STANDARDS.
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