USPAP key terms

The act or process of developing an opinion of value, and also the report that communicates it. Under USPAP it is one category of valuation service and applies to real property, personal property, and intangible assets.

Valuation services an individual performs while acting as an appraiser, including appraisal, appraisal review, and appraisal consulting. USPAP governs this activity, not every incidental task involving numbers or property data.

A person who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective. The label attaches to conduct and expectations, not merely to holding a license.

The party or parties who engage an appraiser by employment or contract in a specific assignment. The client differs from other intended users, who may rely on the results without having hired the appraiser.

The client and any other party the appraiser identifies, by name or by type, as an expected user of the assignment results. Identifying them shapes reporting requirements, confidentiality obligations, and the level of supporting detail.

The use or uses of the reported assignment results, as identified by the appraiser from communication with the client at the time of the assignment. It drives scope of work and how much explanation the report must contain.

A valuation service provided under an agreement between an appraiser and a client. Its purpose, intended use, intended users, and relevant property characteristics frame what work must be done and reported.

An appraiser's opinions, conclusions, or findings developed in an assignment, such as a value opinion or a review conclusion. Rules on disclosure, confidentiality, and reliance attach to these results.

Any service that involves developing or reporting an opinion of value, or reviewing one. The phrase is broad enough to cover appraisal, appraisal review, appraisal consulting, and mass appraisal work.

The type and extent of research and analysis an appraiser performs in an assignment. It must be sufficient to produce credible results for the intended use and must be disclosed in the report.

Worthy of belief. Results are credible when the scope of work, data, and analyses support them and when they are reasonable for the assignment's intended use, not merely arithmetically correct.

An assignment-specific assumption, stated as fact, that if found untrue could change the appraiser's opinions or conclusions. It must be disclosed because it affects the reliability of the results.

A condition contrary to what actually exists at the effective date but assumed for purposes of analysis, such as valuing a building as if already constructed. It must be clearly disclosed in the report.

The estimated period a property interest would have been offered on the open market before a hypothetical consummation at the opined value, given the stated market conditions. It looks backward from the effective date.

A value opinion stated as of a future effective date, reflecting market conditions and property circumstances expected to exist at that date. It differs from a current or retrospective opinion.

The reasonably probable use that is physically possible, legally permissible, financially feasible, and yields the highest value. It frames the use assumed when applying the valuation approaches.

A valuation approach that compares the subject property with similar properties that have sold, are under contract, or are listed, adjusting for differences to arrive at a value indication.

A valuation approach that estimates value by adding the current cost of the improvements, less depreciation, to the value of the land as if vacant, reflecting what a buyer would pay for equivalent utility.

A valuation approach that converts anticipated income or cash flows into a present value indication, using techniques such as direct capitalization or discounted cash flow analysis.

The process of analyzing and weighing the value indications produced by the approaches applied, then selecting a final opinion that best reflects the market for the stated purpose and intended use.

The documentation an appraiser assembles for each assignment, including data, analyses, notes, drafts, and correspondence supporting the report. Retention is generally at least five years, or two years after final disposition of a legal proceeding.

The report option that states the appraiser's opinions and conclusions and summarizes the information, analyses, and rationale relied on, giving intended users enough detail to understand the report.

A report option permitted only when the client is the sole intended user. It states opinions and conclusions with minimal supporting information and cannot be relied on by anyone other than that client.

A signed statement in the report that specified representations are true, such as the appraiser's independence, the absence of undisclosed interests, and compliance with USPAP. It is required in every report.

The USPAP rule governing appraiser conduct. It addresses independence, impartiality, objectivity, advocacy, compensation arrangements, and confidentiality, and it applies to every assignment an appraiser accepts.

An appraiser acting in a way that promotes a client's or another party's position instead of exercising independent, impartial judgment. Serving as an advocate in an assignment is prohibited by the Ethics Rule.

A fee that is set in advance but paid only if a specified event or condition occurs, such as a loan closing, a predetermined value result, or a favorable outcome. Compensation tied to a value conclusion is prohibited.

Information an appraiser receives from or about a client that is not available from public sources and that the client wants kept private. Disclosure is limited by the Ethics Rule's confidentiality provisions.

A state of mind in which the appraiser's judgment is not influenced by personal interest, favoritism, or a desired outcome. It is required for credible results and tested by the Ethics Rule's conduct provisions.

The act or process of developing and communicating an opinion about the quality of another appraiser's work performed as part of an appraisal, review, or consulting assignment. The reviewer forms that opinion independently.

The process of valuing a universe of properties as of a given date using standard methodology, common data, and statistical testing, typically for property tax or portfolio purposes rather than one property at a time.

Identifiable tangible objects that are movable and are treated by the public as personal rather than real, such as equipment, artwork, or collectibles. Its appraisal is governed by the personal property standards.

An entity conducting business activity whose value, ownership interests, or intangible assets may be appraised using income, market, and asset-based approaches under the business valuation standards.

A valuation service other than an appraisal or appraisal review that gives a client information, analysis, recommendations, or opinions to support a real property decision without opining a value for the property.

The rule requiring an appraiser to have, or acquire, the knowledge and experience needed to complete an assignment competently before accepting it, or to disclose the shortfall and take steps to complete it competently.

A USPAP provision allowing an assignment to comply with a conflicting law or regulation of a jurisdiction, so the conflicting USPAP requirement does not apply, provided the exception is properly invoked and disclosed.

Requirements imposed for an assignment by a client, regulator, or other authority that add to USPAP. They must be followed when they do not conflict with USPAP and must be disclosed in the report.