USPAP Frequently Asked Questions for Appraisal Part 1
September 25, 2019 |
These are questions most residential appraisers have asked themselves and wanted answers to – in a hurry. But the answers are in an unexpected place – the Frequently Asked Questions section of the USPAP document!
Yes, that’s right. The huge section in the back of the USPAP document that you look at once a year, during the USPAP 7 Hour Update class. It’s the most pragmatic, and possibly the most under-utilized, section. These are questions and answers that were sent to The Appraisal Foundation over time, with more added every re-printing. In the 2018-2019 volume, there are 332 questions with answers and 20 that are new since the last printing. According to The Appraisal Foundation:
“USPAP Frequently Asked Questions is a form of guidance issued by the ASB to respond to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of USPAP in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.”
You might want to peruse the table of contents, which organizes the questions by subject matter. These are the same subjects that appear weekly on appraisal forums, Facebook group posts, and blogs.
SUBJECT OF Q’s AND A’s: USPAP Frequently Asked Questions
- USPAP Composition, Structure, and Compliance
- Ethics Rule – Management
- Ethics Rule – Confidentiality
- Record Keeping Rule
- Competency Rule
- Jurisdictional Rule
- Appraisal Development – Client Issues
- Appraisal Development – Appraisal dates
- Appraisal Development – Scope of Work Issues
- Appraisal Development – Extraordinary Assumptions/Hypothetical Conditions
- Appraisal Development – Subject Property Sales History
- Appraisal Reporting – Certification and Signatures
- Appraisal Reporting – Use and Format Issues
- Appraisal Review
- Other Services
Let’s take a look an appraisal problem, and see how the answer might be found in the Frequently Asked Questions:
You receive a new appraisal assignment as a part of a sales transaction. This appraisal assignment includes a walk-through observation. The public records state that the home has only two bedrooms, but you observe that it contains three bedrooms. There is no MLS data to review.
Two months later you’ve received a drive-by appraisal request on the same property from a lender – it’s from a different client. The ownership has not changed from your prior report. Since drive-by requests typically rely only on a drive-by observation from the street and a review of public records, you could appraise the property as having only two bedrooms. But that would be misleading, since only two months ago you verified it as having three bedrooms. Appraisal reports are confidential. So, can you use information from the prior report?
Here’s a Question and Answer from the Frequently Asked Questions section to help you:
I am aware that the ASB changed the definition of assignment results to specify that physical characteristics are not assignment results. Does this mean that physical characteristics are not confidential?
Yes. Because physical characteristics are not assignment results, they are not confidential unless identified as such by the client and they are not available from any other source. Physical characteristics are attributes that are observable or measurable. This differs from opinions and conclusions, which are the result of some level of analysis or judgement.
This answer gives you your clarification. You can use information from the prior report that the home had three bedrooms. This is because the number of bedrooms is a physical characteristic, your client didn’t tell you this information should be kept confidential, and that information is not available from any other source. Note that you could also add an extraordinary assumption that the information regarding physical characteristics from your prior inspection is still accurate, just to clarify this further.
Don’t overlook the Frequently Asked Questions in the back of the USPAP document. It’s full of practical answers to topical questions. You may have wondered about these issues in your daily appraisal practice, but didn’t know where to look for answers. With 332 questions with answers, there’s bound to be more that you’ll find useful, and you’ll have your answer straight from the respected source. The Appraisal Foundation. and you’ll have it right away!
Want to learn more? See what I’ve written on USPAP Myths.