USPAP flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

USPAP purpose statement

USPAP exists to promote and maintain public trust in appraisal practice by establishing requirements for appraisers; it is issued by the Appraisal Standards Board of The Appraisal Foundation.

Appraisal practice

A term for valuation services performed by an individual acting as an appraiser, encompassing appraisal, appraisal review, and appraisal consulting assignments.

Contingent compensation prohibition

An appraiser may not accept an assignment in which compensation is contingent on a predetermined value, a direction in value, a range of value, loan approval, or a subsequent event.

Confidentiality Rule

Appraisers may not disclose confidential information or assignment results except to the client, persons authorized by the client, state appraiser regulatory agencies, parties authorized by due process, or peer review committees.

Workfile retention period

The workfile must be retained for 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

An assumption directly related to a specific assignment that, if found false, could alter the appraiser's opinions or conclusions; it must be clearly disclosed in the report.

Hypothetical condition

A condition presumed to be true for the purpose of the assignment even though the appraiser knows it is false, such as assuming a property is vacant; disclosure is required.

Bias

A preference or inclination that precludes an appraiser's impartiality, independence, or objectivity in an assignment; the Ethics Rule prohibits appraisers from being biased.

Ethics Rule components

The Ethics Rule contains four components: Conduct, Management, Confidentiality, and Record Keeping, each imposing specific obligations on appraisers in all appraisal practice.

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 act negligently.

Problem identification (SR 1-2)

Before developing, the appraiser must identify the client and intended users, intended use, type and definition of value, effective date, relevant property characteristics, and assignment conditions.

Scope of work

The type and extent of research and analyses performed in an assignment; it must be sufficient for the appraiser to produce credible assignment results that are not misleading.

Highest and best use

The reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive, producing the highest value of the property.

Data collection (SR 1-4)

The appraiser must collect and analyze market data such as national, regional, and neighborhood trends, plus property data for the subject and comparable properties.

Sales comparison approach

A valuation approach that estimates value by analyzing sale prices of comparable properties and adjusting for differences such as location, size, condition, and market conditions.

Reconciliation (SR 1-6)

The appraiser must analyze and reconcile the value indications from the approaches applied into a single opinion of value consistent with the data presented.

Two written report options

Standard 2 provides two written report options: the Appraisal Report, containing sufficient information for intended users, and the Restricted Appraisal Report, limited to the client.

Report requirement (SR 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 the appraisal properly.

Certification (SR 2-3)

A signed statement certifying required items, including that the appraiser has no present or prospective interest, any prior three-year services are disclosed, and compensation is not contingent.

Restricted Appraisal Report use

Permitted only when the intended users are limited to the client; the report must state the restriction and warn it may not contain sufficient information for other parties.

Oral report requirements

An oral appraisal report must address the same substantive content items as a written report and its content must be documented in the workfile.

Report and effective dates

Every report must state both the effective date of the appraisal, which is the date the value opinion applies to, and the date the report was prepared.

Standard 3 appraisal review

It governs the development and reporting of appraisal reviews, which express an opinion about the quality and credibility of another appraiser's work.

Reviewer's own value opinion

If a reviewer develops his or her own opinion of value, that portion of the assignment must comply with Standards 1 and 2 as well as Standard 3.

Standards 4 and 5

They govern the development and reporting of real property appraisal consulting assignments, which solve client problems through analysis rather than necessarily providing a value opinion.

Standards 6 and 7

They govern mass appraisal development and reporting, in which standardized data and statistical models are applied to groups of properties as of a given date.

Standards 8 and 9

They govern the development and reporting of personal property appraisals, covering items such as machinery, equipment, artwork, and collectibles rather than real estate.

Standard 10 scope

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

Competency Rule

Before accepting an assignment, an appraiser must identify the problem to be solved and possess the knowledge and experience needed to complete it competently.

Lacking competency

The appraiser must disclose the lack of knowledge and experience to the client before accepting, take steps to complete the assignment competently, and disclose those steps in the report.

Jurisdictional Exception Rule

When USPAP conflicts with a jurisdiction's law, regulation, or ordinance, the appraiser must comply with the law and disclose the exception, citing the specific legal authority.

Supplemental Standards Rule

An appraiser must comply with published supplemental standards imposed by a client or agency, provided they do not conflict with USPAP; a conflict must be disclosed.