Closets and USPAP standards, how are they alike?
The Appraisal Standards Board (ASB) is treating retired USPAP STANDARDS 4 and 5 like empty closets….. they just had to fill them! The new STANDARD 4 is titled Appraisal Review, Reporting. STANDARD 5 is now titled Mass Appraisal, Development. This ‘Food for Thought’ is going to discuss issues related to the new STANDARD 4.
We can’t talk about the new STANDARD 4 without discussing the existing STANDARD 3.
As you probably know, STANDARD 3 Appraisal Review, encompasses both appraisal review development and reporting. Basically, the ASB bifurcated STANDARD 3 making STANDARD 3 Appraisal Review Development and STANDARD 4 Appraisal Review Reporting.
Typically, in the Summary of Actions Related to USPAP Changes, the ASB will strike through words removed and underscore new words, but due to the extent of the changes to STANDARD 3 and the addition of STANDARD 4, the specific edits are not shown in underscore and strikethrough text. Our recommendation is to read them in their entirety. (STANDARD 3)
One notable change, that relates directly to STANDARDS 3 and 4 are changes to the definition of APPRAISAL REVIEW. ASB chose to eliminate “communicating” an opinion, as part of the definition and added a second part to the definition, making Appraisal Review useable as either a noun or an adjective. Here is the new definition:
APPRAISAL REVIEW :(noun) 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 or appraisal review assignment; (adjective) of or pertaining to an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.
To be able to fully grasp the new definition, one must also read the ASB’s new definition of ASSIGNMENT: a valuation service that is provided by an appraiser as a consequence of an agreement with the client.
All in all, the ASB definition of APPRAISAL REVIEW, like many definitions by other reliable sources, is long and perhaps a bit difficult to process. I don’t want to pick on the ASB to much, because they have to approve our next USPAP course, but when I read those words closely, I believe I know what they mean.
A summary might be: APPRAISAL REVIEW: 1. (noun) an opinion about the quality of another appraiser’s appraisal or appraisal review assignment; (adjective) when it is used as a modifier for a noun like: (appraisal review) report.
I have a question for you. Why, in the definition of APPRAISAL REVIEW does the ASB describe an appraisal review as, developing an opinion about the quality of part of an appraisal or appraisal review assignment? Do you think they really wanted to differentiate between part of an assignment and a whole assignment? In the past when I have conducted an appraisal review, I was sent an appraisal report to review; a report is only part of an assignment. Perhaps, this is why they refer to it as part of the assignment. What do you think?
Well, I hope this has provided you with an opportunity to review and think about some of the changes that have been promulgated for the 2018 – 2019 USPAP publication.
We really enjoy the feedback we receive from our readers and look forward to your comments about this Food for Thought.
To help us continue to grow our catalog of seminars and provide you with what you need, send us a quick note describing a seminar you would like provided.
We have a terrific new course coming out this summer called Concept to Completion. It teaches appraisers how to effectively review blueprints/residential building plans, conduct periodic inspections of new construction, and complete the final inspection whereby the appraiser’s hypothetical value is reconciled based on the completed residential property. Graphically rich with terrific videos, we think it’s going to serve a need and be really enjoyable. Stay tuned for our discount opportunities.
As always, good luck and do good work.