ASFMRA RPRA cheat sheet

Review is an appraisal-development act when the reviewer forms and reports an independent opinion of value; USPAP Standards 3 and 4 govern it.

Three review outcomes: (1) concur with the original value, (2) concur but with a different value, (3) dissent from the original value and state the reviewer's own conclusion.

Standard 3 requires the reviewer to identify the review's intended use, scope of work, and the appraisal under review (report date, appraiser, property).

A review opinion must be supported by the reviewer's own analysis; adopting the original appraiser's reasoning without independent verification is not compliant.

Scope-of-work in review is judged by the expectation of parties who regularly rely on such reviews; a desk review and a field review legitimately differ in scope.

If the reviewer's opinion of value differs from the work under review, Standard 4 requires reporting the reviewer's own value conclusion and its support.

Reviewers must state whether the original report's analyses, opinions, and conclusions are appropriate and reasonable, not merely whether the report is well formatted.

Extraordinary assumptions and hypothetical conditions in the original report must be identified by the reviewer and evaluated for effect on credibility.

Income approach for farmland: Value = Net Operating Income ÷ Capitalization Rate; cap rates derive from comparable agricultural sales (band of investment or market extraction).

Sales comparison for rural property adjusts for date of sale, location, soil productivity, irrigation, building contributory value, and parcel size (economies of scale).

Productivity (soil-based) value: expected long-run net return per acre from the soil's yield potential capitalized at a market-derived rate; used where comparable sales are thin.

Cost approach is relied on for specialized agricultural improvements (bins, milking parlors, irrigation systems); depreciation includes physical, functional, and external obsolescence.

Highest and best use for rural land considers legal, physically possible, financially feasible, and maximally productive uses, including transitional or recreational uses.

Lease analysis: cash rent, share rent, and flexible leases produce different income streams; normalize to market rent and account for landlord's and tenant's shares of expenses.

Water rights, conservation easements, and enrolled program contracts (e.g., CRP) are non-realty or partial interests that must be identified and valued separately.

Unit of comparison varies: per acre, per productive acre, per animal unit, per bushel of storage, or per acre-foot of water; selection must match the property type.

Standard 1 (development) and Standard 2 (reporting) apply to the original appraisal; Standards 3 and 4 apply to the review; the reviewer must comply with both the review standards and applicable development/reporting standards when forming an opinion.

Competency Rule: a reviewer must have, or acquire, the knowledge and experience to review the property type and assignment; otherwise disclose the limitation or decline.

Scope of work is the amount and type of research and analysis needed to produce credible results; it is assignment-specific and must be disclosed.

Credibility standard replaces the former 'specificity' test: the reviewer asks whether the report's analyses and conclusions are credible given the intended use.

Common review findings: unsupported adjustments, inadequate highest and best use analysis, incorrect cap rate derivation, misstated market conditions, and internal inconsistencies.

Jurisdictional exception: where USPAP conflicts with law, USPAP yields only to the extent of the conflict; the reviewer must identify the exception and cite the authority.

Recordkeeping: workfiles must be retained for at least five years after the report date (or two years after final disposition of litigation, whichever is later).

Workfile must contain the data, analyses, and documentation supporting the reviewer's opinion, including copies of the reviewed report and communications with the client.

USPAP Ethics Rule: no misrepresentation, no misleading or fraudulent reporting, and no acceptance of an assignment contingent on a predetermined result.

Compensation must not be contingent on the value conclusion, the approval of a loan, or the amount of the value opinion; fee must reflect the assignment's scope.

Confidentiality Rule: client information is confidential except as authorized by the client, required by law, or necessary for the assignment; the reviewer may not disclose the original appraiser's data without authorization.

A reviewer must not sign a report prepared by another appraiser unless the reviewer performed the required analyses and accepts responsibility for the content.

ASFMRA accreditation requires documented experience, education, and a demonstration appraisal; the RPRA credential is a review designation with its own experience and examination requirements.

Continuing education: credential holders must satisfy periodic CE hours, including ethics and USPAP updates, to maintain good standing.

Independence and objectivity: a reviewer must decline an assignment where the reviewer has a financial or personal interest in the outcome, and must disclose prior involvement with the property.

Advertising and public statements must not be misleading; credentials must be stated accurately and only those actually held may be claimed.