USPAP cheat sheet

The Preamble states USPAP's purpose: to promote and maintain public trust in appraisal practice by establishing requirements for appraisers; USPAP is issued by the Appraisal Standards Board of The Appraisal Foundation.

Appraisal practice comprises three service lines: appraisal, appraisal review, and appraisal consulting; USPAP applies to all three.

The Ethics Rule has four components: Conduct, Management, Confidentiality, and Record Keeping.

Conduct: an appraiser must not advocate the cause of a client or party, and must not accept an assignment whose compensation is contingent on a predetermined value or direction in value, a value within a range, loan approval, or a subsequent event tied to intended use.

Management: an appraiser must disclose any direct or indirect interest in the property or the parties, and must not pay undisclosed fees, commissions, or things of value to procure an assignment.

Confidentiality: confidential information and assignment results may be disclosed only to the client, persons authorized by the client, state appraiser regulatory agencies, parties authorized by due process of law, or a duly authorized peer review committee.

Record Keeping: the workfile must be retained at least five years after delivery of the report, or at least two years after final disposition of a judicial proceeding in which the appraiser testified.

Extraordinary assumption = assignment-specific assumption that, if false, could alter opinions or conclusions. Hypothetical condition = condition presumed true that the appraiser knows to be false. Both require disclosure.

USPAP does not define market value; the appraiser must identify the type of value and state its definition. Credible means worthy of belief, and depends on a scope of work that is meaningful and not misleading.

Standards Rule 1-1: the appraiser must be aware of, understand, and correctly employ recognized methods and techniques, must not commit a substantial error of omission or commission, and must not render services in a careless or negligent manner.

Standards Rule 1-2 (problem identification): identify the client and any other intended users, intended use, type and definition of value, effective date, relevant property characteristics, and all assignment conditions.

Standards Rule 1-3 (scope of work): the research and analyses must be sufficient to produce credible assignment results that are not misleading; scope decisions must be supportable.

Standards Rule 1-4 (data collection): gather and analyze market data (national, regional, neighborhood, competitive) and property data for both the subject property and comparables.

Standards Rule 1-5 (analysis): analyze market conditions, highest and best use, and apply the cost, income, and sales comparison approaches as applicable to the assignment.

Highest and best use requires four tests applied in sequence: legally permissible, physically possible, financially feasible, and maximally productive.

Standards Rule 1-6 (reconciliation): analyze and reconcile the value indications from the approaches applied into a single opinion of value consistent with the data presented.

Extraordinary assumptions and hypothetical conditions must be identified during development and disclosed in the report; they cannot be used to avoid necessary research.

Standards Rule 2-1: each report must clearly and accurately set forth the appraisal in a manner that is not misleading and contains sufficient information for intended users to understand it properly.

Two written report options exist: the Appraisal Report under SR 2-2(a) and the Restricted Appraisal Report under SR 2-2(b).

Restricted Appraisal Report: permitted only where the intended users are limited to the client; the report must state the restriction and warn that it may not contain sufficient information for other parties.

Minimum content items include client and other intended users, intended use, definition of value, effective date, property identification and relevant characteristics, scope of work, assignment conditions, approaches used, reconciliation, final value opinion, and report date.

The report must state the definition of value used and disclose whether the opinion is market value, plus disclose all extraordinary assumptions and hypothetical conditions.

Standards Rule 2-3 (certification): the signed certification addresses, among other items, no present or prospective interest in the property, disclosure of any services within the prior three years, non-contingent compensation, absence of bias, and significant real property appraisal assistance.

Standards Rule 2-4: an oral report must address the same substantive content items as a written report, and its content must be documented in the workfile.

Every report must state both the effective date of the value opinion and the date of the report, and must be signed by the appraiser responsible for the content.

Standard 3 governs appraisal review, covering both development and reporting of an opinion about the quality and credibility of another appraiser's work.

A review must identify the work under review, state the scope of review, and state whether the analyses, opinions, and conclusions under review are appropriate and credible.

If a reviewer develops his or her own opinion of value, that portion must comply with Standards 1 and 2 in addition to Standard 3; a reviewer must be competent in the property type and market reviewed.

Standards 4 and 5 govern the development and reporting of real property appraisal consulting assignments.

Standards 6 and 7 govern mass appraisal development and reporting, applying standardized data and statistical models to groups of properties as of a given date; results may be reported individually or in aggregate.

Standards 8 and 9 govern the development and reporting of personal property appraisals, such as machinery, equipment, artwork, and collectibles.

Standard 10 governs business and intangible asset appraisals, requiring identification of the interest being valued and consideration of income, market, and asset-based approaches as applicable.

Standards 3 through 10 build on the same framework as Standards 1 and 2: problem identification, scope of work, data collection and analysis, then reconciliation and reporting.

Competency Rule: before accepting an assignment, the appraiser must identify the problem to be solved and have the knowledge and experience to complete the assignment competently.

If competency is lacking, the appraiser must disclose the lack of knowledge and experience to the client before accepting, take all steps necessary to complete the assignment competently, and disclose that fact and the steps taken in the report and certification.

The Competency Rule applies to every service line - appraisal, appraisal review, and appraisal consulting - not only to value opinions.

Jurisdictional Exception Rule: when any part of USPAP conflicts with the law, regulation, or ordinance of a jurisdiction, the appraiser must comply with the law and disclose the exception in the report, citing the specific legal authority.

Jurisdictional Exception is not a general waiver; absent an actual conflict with law, all applicable USPAP requirements remain in force.

Supplemental Standards Rule: the appraiser must comply with published supplemental standards imposed by a client or agency, provided they do not conflict with USPAP.

If supplemental standards conflict with USPAP, USPAP governs and the appraiser must disclose the conflict in the report.