§15.3 - Uniform Standards of Professional Appraisal Practice (USPAP)

• Jurisdiction: Washington

§15.3 UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP)

The USPAP are published in the United States of America by the Appraisal Foundation. The USPAP may be altered, amended, interpreted, and supplemented from time to time by the Appraisal Standards Board (ASB) of the Appraisal Foundation. The USPAP have been wholly adopted by the Appraisal Institute, in its Standards of Professional Practice of the Appraisal Institute, and typically a revised version of these standards is published annually by the Institute. A copy of these standards, which includes the latest version of USPAP, together with the additional standards and ethical requirements for Institute members and associates, is available for a nominal fee from the Institute. All licensed and certified appraisers must comply with USPAP, and because Washington state has mandatory licensing, it follows that all real property appraisals prepared on any property in Washington should comply with these standards.

(1) Definitions

The following definitions have been developed by the ASB and are in the USPAP.

Appraisal: (noun) the act or process of developing an opinion of value; an opinion of value; (adjective) of or pertaining to appraising and related functions, e.g., appraisal practice, appraisal services.

Report: any communication, written or oral, of an appraisal, appraisal review, or consulting service that is transmitted to the client upon completion of an assignment.

Comment: The terms appraisal and appraisal report are used somewhat interchangeably in the industry and by clients however they have specific meaning with the appraisal being the appraiser's opinion, and the report being the manner in which it is conveyed. Oral report guidelines cover court testimony and other oral communications by an appraiser of an appraisal, review, or consulting service. There are only three types of written appraisal report that are authorized by USPAP Self-Contained Appraisal Report, Summary Appraisal Report, and Restricted Use Appraisal Report. Details of what to expect from these reporting formats are presented below.

Appraisal Review: the act or process of developing and communicating an opinion about the quality of another appraiser's work that was performed as part of an appraisal, appraisal review, or appraisal consulting assignment.

Comment: If you wish to have an appraisal reviewed by another appraiser and the reviewing appraiser believes the report provides an erroneous value conclusion, the reviewer's opinion of value may also be desired. The reviewing appraiser needs to take care in providing such a value estimate, as he or she is effectively appraising the property in question and needs to meet the applicable standards for such an appraisal. This can be accomplished by accepting certain information as accurate in the appraisal (if it is so) and supplementing this as necessary (for example with additional sales data) to support a different opinion of value.

Assignment Results: an appraiser's opinions or conclusions developed specific to an assignment. The results could include opinions or conclusions not limited to value, an opinion about the quality of another appraiser's work, or an opinion developed while executing a valuation service other than an appraisal or appraisal review assignment.

Client: the party or parties who engage an appraiser (by employment or contract) in a specific assignment. The client may be an individual, group, or entity, which may communicate or engage with the appraiser either through an agent or directly.

Exposure Time: an estimate of the length of time that the property interest being appraised would have been offered on the market before it hypothetically sold at market value on the effective date of the appraisal. It is a retrospective opinion.

Extraordinary Assumption: an assumption that, if found to be false, would change the appraiser's conclusions for that specific assignment as of the effective date of the assignment.

Hypothetical Condition: a condition known by the appraiser to be false as of the date of the appraisal assignment, but which is used for the purpose of analysis.

Feasibility Analysis: a study of the cost-benefit relationship of an economic endeavor.

Jurisdictional Exception: an assignment condition that voids the force of a part or parts of USPAP, when compliance with part or parts of USPAP is contrary to law or public policy applicable to the assignment.

Market Value: a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights) as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal.

Comment: Market value is the focus of most real property appraisal assignments. Both economic and legal definitions of market value have been developed and refined. A current economic definition agreed upon by federal financial institutions in the United States of America follows:

"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date, and the passing of title from seller to buyer under conditions whereby: a. the buyer and seller are typically motivated;

b. both parties are well informed or well advised, and acting in what they consider their own best interests;

c. a reasonable time is allowed for exposure in the open

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