Uniform Standards of Professional Appraisal Practice

1
Uniform Standards of Professional Appraisal
Practice

• RELE 4708
• Instructor William N. Gauthier
• Summer Semester
• July 2006 - IV
• http//www.bf.westga.edu/VP/USPAP/

2

• The Uniform Standards of Professional
  Appraisal Practice (USPAP) are based on an
  original set of standards developed in 1986-1987
  by the Ad Hoc Committee on Uniform Standards.
• The Appraisal Foundation (TAF), has
  independent authority over appraisal standards
  through it entity, The Appraisal Standards Board
  (ASB). Each appraisal organization has adopted
  USPAP.
• The standards are considered to be a living
  document. They can be altered, amended,
  interpreted, supplemented, or repealed by the
  Appraisal Standards Board (ASB) of The Appraisal
  Foundation after exposure to the appraisal
  profession, users of appraisal services, and the
  public in accordance with established rules of
  procedure.

3
The Financial Institutions Reform, Recovery and
Enforcement Act

• At the time the Financial Institutions Reform,
  recovery and Enforcement Act (FIRREA) was signed
  into law (August 9, 1989) the USPAP had become
  recognized and accepted as the uniform standards
  of the appraisal profession. Included in Section
  1110 of Title XI of FIRREA is the following
  statement
• that real estate appraisals be performed in
  accordance with generally accepted appraisal
  standards as evidenced by the appraisal standards
  promulgated by the Appraisal Standards Board of
  the Appraisal Foundation

4
State Licensing/Certification

• Every jurisdiction has, by statute, an appraiser
  licensing/certification program in operation. The
  USPAP has been incorporated in the statutes that
  created the state licensing and certification of
  appraisers.
• Georgia 95 hours (?) plus USPAP

5

• The USPAP comprises the following sections
• Preamble
• Ethics Rule
• Competency Rule
• Departure Rule
• Jurisdictional Exception Rule
• Supplemental Standards Rule
• Definitions

6

• USPAP (continued)
• Standards and Standards Rules
• Standard 1 Real Property Appraisal,
  Development
• Standard 2 Real Property Appraisal, Reporting
• Standard 3 Appraisal review, Development and
  Reporting
• Standard 4 Real Property Appraisal Consulting,
  Development
• Standard 5 Real Property Appraisal Consulting,
  Reporting
• Standard 6 Mass Appraisal, Development and
  Reporting
• Standard 7 Personal Property Appraisal,
  Development
• Standard 8 Personal Property Appraisal,
  Reporting
• Standard 9 Business Appraisal, Development
• Standard 10 Business Appraisal, Reporting
• Statements on Appraisal Standards
• Advisory Opinions

7
Standards

• 10 Standards - Broad Statements
• Standards 1 and 2 deal with development of a real
  property appraisal and
• reporting of the appraisal
• Standard 3 deals with Appraisal Review,
  Development and Reporting
• Standards 4 and 5 cover substantive aspects of
  real property appraisal
• consulting and reporting
• Standard 6 covers Mass Appraisal, Development and
  Reporting
• Standards 7 and 8 deal with personal property
  appraisal
• Standards 9 and 10 cover business or intangible
  asset appraisal
• Standards Rules

8
Statements on Standards ASB also
publishes statements on standards to clarify,
interpret, explain, and/or elaborate on the
standards and the standards rules. Statements on
Standards assist appraisers, clients, users, and
the general public in under- standing the
standards. Statements have the same weight as the
standards rules and can only be adopted by the
ASB after exposure draft and proper time
for comments.
Advisory Opinions Advisory opinions
also are issued by the ASB. These opinions are
considered by the ASB as informal responses to
requests it receives for information, Opinions
do not establish new standards. Appraisers and
users should look to see how peers in the
profession view the correct application of the
standards.
9
Preamble and Rules

• The Preamble and Rules section of the
  uniform standards sets the general
• tone for the responsibilities of an appraiser.
• Subsections of the Preamble and Rules are as
  follows
• PREAMBLE
• ETHICS RULE
• COMPETENCY RULE
• DEPARTURE RULE
• JURISDICTIONAL EXCEPTION RULE
• SUPPLEMENTAL STANDARDS RULE
• DEFINITIONS

10
Preamble

• The purpose of the Uniform Standards of
  Professional Appraisal
• Practice (USPAP) is to promote and maintain a
  high level of
• public trust in appraisal practice by
  establishing requirements for
• appraisers. It is essential that appraisers
  develop and
• communicate their analyses, opinions, and
  conclusions to
• intended users of their services in a manner that
  is meaningful
• and not misleading.

11
Ethics Rule

• To promote and preserve the public trust
• inherent in professional appraisal practice, an
• appraiser must observe the highest standards of
• professional ethics. This Ethics Rule is divided
• into four sections
• 1. Conduct
• 2. Management
• 3. Confidentiality
• 4. Record Keeping

12
Conduct The Conduct section
requires the appraiser to perform with
impartiality, objectivity, and independence.
Appraisal independence is paramount. Independ
ence, Impartiality, and Objectivity Appraiser
must not use or rely on unsupported conclusions
13

• Management
• The management section of the Ethics Rule does
  not permit
• payment of undisclosed fees.
• It is unethical for an appraiser to accept an
  assignment, or to have a compensation
• arrangement for an assignment, that is
  contingent on any of the following
• 1) the reporting of a predetermined result
  (e.g., opinion of value)
• 2) a direction in assignment results that favors
  the cause of the client
• 3) the amount of a value opinion
• 4) the attainment of a stipulated result or
• 5) the occurrence of a subsequent event directly
  related to the appraisers
• opinions and specific to the
  assignments purpose.
• Standards Rule 2-3
• My compensation for completing this assignment is
  not contingent upon the
• development or reporting of a predetermined
  value or direction in value that favors the
• cause of the client, the amount of the value
  opinion, the attainment of a stipulated
• result, or the occurrence of a subsequent event
  directly related to the intended use of

14
Confidentiality

• An appraiser must protect the confidential nature
  of the appraiser-client
• relationship.
• The Confidentiality section covers the use of
  confidential
• information. Disclosure can be made to
• 1) the client and persons specifically
  authorized by the
• client
• 2) state enforcement agencies and such third
  parties as
• may be authorized by due process of law
  and
• 3) a duly authorized professional peer review
  committee
• except when such disclosure to a committee
  would
• violate applicable law or regulation.

15
Record Keeping

• The fourth and final section of the Ethics Rule
  addresses requirements for
• record keeping. Appraisers are required to
  prepare a work file for each
• assignment and to retain such work files for each
  appraisal, appraisal review,
• or appraisal consulting assignment for a period
  of at least
• 1) five years after preparation, or
• 2) at least two years after final disposition
  of any judicial proceeding
• in which testimony was given.

16
Competency Rule

• The Competency rule states
• Prior to accepting an assignment or entering into
  an agreement to perform any
• assignment or entering into an agreement to
  perform any assignment, an
• appraiser must properly identify the problem to
  be addressed and have the
• knowledge and experience to complete the
  assignment competently or
• alternatively
• 1) disclose the lack of knowledge and/or
  experience to the client before
• accepting the assignment
• 2) take all steps necessary or appropriate to
  complete the assignment
• competently and
• 3) describe the lack of knowledge and/or
  experience and the steps taken to
• complete the assignment competently in the
  report.

17
Departure Rule

• The Departure Rule of the USPAP states in part
• This Rule permits exceptions from sections of the
  Uniform Standards that are classified as
• specific requirements rather than binding
  requirements. The burden of proof is on the
  appraiser to
• decide before accepting an assignment and
  invoking this Rule that the scope of work applied
  will
• result in opinions or conclusions that are
  credible. The burden of disclosure is also on the
  
• appraiser to report any departures from specific
  requirements.
• The burden of proof is squarely on the shoulders
  of the appraiser.

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An appraiser my enter into an agreement to
perform an assignment in which the scope of work
is less than, or different from, the work that
would otherwise be required by the specific
requirements, provided that prior to entering
into such an agreement 1) the appraiser has
determined that the appraisal process to be
performed is not so limited that the results of
the assignment are no longer
credible 2) the appraiser has advised the
client that the assignment calls for
something less than, or different from,
the work required by the
specific requirements and that the report will
clearly identify and explain
the departure(s) and 3) the client has agreed
that the performance of a limited appraisal
service would be appropriate, given
the intended use. Certain standards rules do not
permit departure, particularly as the
USPAP relates to the appraisal of real property.
Standards Rules 1-1, 1-2, 1-5, 1-6, 2-1, 2-2,
and 2-3 do not permit departure. Each of these
standards rules are followed by the comment This
Standards Rule contains binding requirement from
which departure is not permitted.
19
Jurisdictional Exception Rule

• The Jurisdictional Exception Rule states
• If any part of these Standards is contrary to
  the law or public policy of any
• jurisdiction, only that part shall be void and
  of no force or effect in that
• jurisdiction.
• Supplemental Standards Rule
• This rule states
• These Uniform Standards provide the common basis
  for all appraisal
• practice. Supplemental standards applicable to
  assignments prepared for
• specific purposes or property types may be
  issued (i.e., published) by
• government sponsored enterprises, or other
  entities that establish public
• policy. An appraiser and client must ascertain
  whether any such published
• supplemental standards in addition to these
  Uniform Standards apply to the
• assignment being considered.

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Market Value

• Market value is normally defined as The most
  probable price which a
• Property should bring in a competitive and open
  market under all conditions
• requisite to a fair sale, the buyer and seller
  each acting prudently and
• Knowledgeably, and assuming the price is not
  affected by undue stimulus.
• Implicit in this definition is the consummation
  of a sale as of a specified date
• and the passing of title from seller to buyer
  under conditions whereby
• 1) buyer and seller are typically motivated
• 2) both parties are well-informed or
  well-advised, and acting in what they
• consider their best interests
• 3) a reasonable time is allowed for exposure in
  the open market
• 4) payment is made in terms of cash in United
  States dollars or in terms of
• financial arrangements comparable thereto
  and
• 5) the price represents the normal consideration
  for the property sold
• unaffected by special or creative financing
  or sales concessions granted by
• anyone associated with the sale.

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PREAMBLE AND RULESKEY POINTS

• The Preamble and Rules section sets the general
  tone for the responsibilities of an appraiser.
• The Preamble recognizes the appraiser and his or
  her obligations to the intended users of
• their services.
• Public trust is inherent in an appraisal
  practice.
• The Ethics rule is divided into four specific
  sections conduct, management, confidentiality,
• and record keeping.
• The acceptance of a contingency fee by an
  appraiser when developing an opinion of value is
• unethical.
• False, misleading, or exaggerated advertising
  violates the Management section of the Ethics
• Rule.
• An appraiser must protect the confidential nature
  of the appraiser-client relationship.
• Appraisers are required to retain their work
  files for a period of at least 5 years after
• preparation or at least 2 years after final
  disposition of any judicial proceeding in which
• testimony was given, whichever period expires
  last.
• Prior to accepting an appraisal assignment, an
  appraiser must have the knowledge and
• experience necessary to complete the assignment
  competently, or else take the specific steps to
• properly serve the clients best interest.
• The USPAP permits an appraiser to accept a
  limited assignment the appraiser, however,
• must determine that the results will not be
  confusing or misleading.

22
Standard 1

• Real Property Appraisal, Development

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Standard 1

• In developing a real property appraisal, an
• appraiser must identify the problem to be solved
• and the scope of the work necessary to solve the
• problem, and correctly complete research and
• analysis necessary to produce a credible
• appraisal.

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Appraisal Process
Five Important Steps

• Define the problem
• Determine the scope of the work
• Collect and analyze relevant information
• Reconcile the information analyzed
• Report the results of the assignment

Standard 1 contains six standard rules --four
are binding requirements --two are specific
requirements
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Scope of Work Defined in USPAP

• Amount and type of information researched and the
• analysis applied in an assignment includes, but
  is not
• limited to
• The degree to which the property is inspected
• or identified
• The extent of research into physical or economic
• factors that could affect the property
• The extent of data research and
• The type and extent of analysis applied to arrive
  at
• opinions or conclusions.

The appraisers scope of work is acceptable
when consistent with what the market participants
expect and the appraiser has performed the
assignment in line with what appraiser peers
would do.
26
Two types of appraisals under Standard
1 Complete Appraisal The act or process of
developing an opinion of value developed
without invoking the Departure Rule
and Limited Appraisal The act or process of
developing an opinion of value developed
under and resulting from invoking the
Departure Rule. Types of Limited
Appraisals Evaluation Update of an
Appraisal Recertification of Value
27

• Standards Rule 1-1 (binding requirement)
• Be aware, understand, correctly employ recognized
• methods and techniques
• Not commit a substantial omission or commission
• Not render appraisal services in careless or
• negligent manner which may affect credibility
  of
• those results

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• Standards Rule 1-2 (binding requirement)
• An appraiser must
• Identify the client and intended users
• Identify intended use of the opinions and
  conclusions
• Identify type and definition of value and if the
  market value is
• the most probable price
• in terms of cash, financial arrangements
  equivalent to cash
• in other precisely defined terms and
• If opinion of value is based on non-market
  financing or financing with unusual conditions or
• incentives, terms must be clearly identified and
  appraisers opinion of their contributions to
• or negative influence on value must be developed
  by analysis

• Identify the effective date of appraisers
  opinions and
• conclusions
• Identify the characteristics of property to type
  and definition
• of value, including

• Location and physical, legal, and economic
  attributes
• Real property interest
• Personal property, trade fixtures or intangible
  items included
• Known easements, restrictions, encumbrances,
  leases, reservations,
• covenants, contracts, declarations, special
  assessments, ordinances and
• Whether subject property is fractional interest,
  physical segment, or
• partial holding.

• Identify scope of work
• Identify extraordinary assumptions necessary
• Identify any hypothetical conditions necessary

29

• Standards Rule 1-3 (specific requirement)
• When the value opinion is market value,
  given the scope of
• work
• Identify and analyze the effect on use and value
  of
• existing land use regulations, reasonably
  probable
• modifications of land use regulations, economic
• demand, the physical adaptability of real
  estate, and
• market area trends and
• Develop an opinion of the highest and best use of
  the
• real estate.

30
Standards rule 1-4 (specific requirement)

• In developing a real property appraisal,
  appraiser must collect, verify,
• and analyze all information, given the scope of
  work.
• When sales comparison approach, analyze
  comparable sales data
• When cost approach
• Develop opinion of site value
• Analyze comparable cost data to the cost new of
  the improvements
• Analyze such comparable data as are available to
  estimate difference
• When income approach
• Analyze comparable rental data and/or potential
  earnings capacity of property to estimate gross
  income potential
• Analyze comparable operating expense
• Analyze comparable data available to estimate
  rates of capitalization and/or rates of discount
• Base projections of future rent or income
  potential and expenses on clear and appropriate
  evidence.
• When developing value of leased fee estate or a
  leasehold estate, appraiser must analyze effect
  on value of terms and conditions of lease(s).
• Analyze value of assemblage of various estates or
  component parts of a property and refrain from
  valuing the whole solely by adding together
  individual values.
• Analyze effect on value of personal property,
  trade fixtures or intangible items included in
  appraisal.
• Proposed improvements must examine
• Plans, specifications, or other documentation to
  identify scope and character of improvements
• Evidence indicating probable time of completion
• Appropriate evidence supporting development
  costs, anticipated earnings, occupancy
  projections, and anticipated competition.

31
Standards Rule 1-5 (binding agreement)

• When value opinion is market value, an appraiser
  must
• Analyze agreements of sale, options, or listings
  of subject property as of the effective date of
  the appraisal
• Analyze all sales of subject property that
  occurred within the three (3) years prior to
  effective date of appraisal

32
Standards Rule 1-6 (binding requirement)

• An appraiser must
• Reconcile quality and quantity of data available
  and analyzed within the approaches used and
• Reconcile the applicability or suitability of
  approaches used to arrive at value
  conclusion(s).

33
Standard 2

• Real Property Appraisal,
• Reporting

34
Standard 2 states

• In reporting the results of a real property
  appraisal an
• appraiser must communicate each analysis,
  opinion, and
• conclusion in a manner that is not misleading.
• Standard 2 is directed toward the content and
  level of
• information required in a real property appraisal
  report. The
• standard does not dictate the form, format, and
  style of the
• report.

35
USPAP identifies three types of written appraisal
reports

• Written report prepared under Standards Rule
  2-2(a)
• Written report prepared under Standards Rule
  2-2(b)
• Written report prepared under Standards Rule
  2-2(c)

36
Appraisals/Appraisal Report Combinations

• STANDARD 1 STANDARD 2
• Complete Self-contained
• Complete Summary
• Complete Restricted Use
• Limited Self-contained
• Limited Summary
• Limited Restricted Use

37
Standards Rule 2-1 (binding requirement)

• Each written or oral real property appraisal
  report must
• Clearly and accurately set forth appraisal in
  manner that will not be misleading
• Contain sufficient information to enable the
  intended users of appraisal to understand the
  report properly and
• Clearly and accurately disclose all assumptions,
  extraordinary assumptions, hypothetical
  conditions, or limiting conditions used.

38
Standards Rule 2-2 (binding requirement)

• Each written real property appraisal report must
  be prepared under on of three
• options and prominently state option used
  Self-Contained Appraisal Report,
• Summary Appraisal Report, or Restricted Use
  Appraisal Report.
• Content of Self-Contained Appraisal Report must
  be consistent with intended use, and at a
  minimum
• State identity of client and intended users
• State intended use of appraisal
• Information sufficient to identify real estate
  involved in appraisal, including physical and
  economic property characteristics relevant
• State the real property interest appraised
• State type and definition of value and source of
  definition
• Effective date of appraisal and date of report
• Sufficient information to disclose scope of work
• Clearly disclose extraordinary assumptions,
  hypothetical conditions, limiting conditions and
  state that use might have affected results
• Describe information analyzed, the appraisal
  procedures followed, and reasoning that supports
  analyses, opinions, and conclusions
• Use of real estate existing as of date of value
  and use reflected in appraisal and when
  reporting opinion of market value, describe
  support and rationale for appraisers opinion of
  highest and best use of real estate
• Explain any permitted departures from specific
  requirements of Standard 1
• Include signed certification with Standards Rule
  2-3.

39
Standards Rule 2-2 (binding requirement)-
continued

• Content of Summary Appraisal Report must be
  consistent with Intended Use of appraisal and, at
  a minimum
• Identify client and intended users
• State intended use
• Identify real estate involved, including physical
  and economic property characteristics relevant
• State real property interest appraised
• State type and definition of value and source of
  definition
• State effective date of appraisal and date of
  report
• Summarize information to disclose scope of work
• Clearly disclose extraordinary assumptions,
  hypothetical conditions, and limiting conditions
• Summarize information analyzed, appraisal
  procedures followed, reasoning that supports
  analyses, opinions and conclusions
• State use of real estate existing as of date of
  value and use of real estate reflected in
  appraisal and when reporting opinion of market
  value, summarize the support and rationale for
  appraisers opinion of highest and best use
• State and explain any permitted departures from
  specific requirements of Standard 1
• Include signed certification

40
Standards Rule 2-2 (binding requirement)-
continued

• Content of a Restricted Use Appraisal Report must
  be consistent with the
• intended use of the appraisal and, at a minimum
• State identity of client by name or type
• State intended use
• State information sufficient to identify real
  estate involved in appraisal
• State real property interest appraised
• State type and definition of value and cite
  source of definition
• State effective date of appraisal and date of
  report
• State extent of process of collecting,
  confirming, and reporting date or refer to
  assignment agreement retained in appraisers work
  file describing scope of work
• Clearly and conspicuously disclose use of all
  extraordinary assumptions, hypothetical
  conditions, and limiting conditions
• State appraisal procedures followed, value
  opinions and conclusions and reference work file
• State use of real estate existing as of date of
  value and use of real estate reflected in
  appraisal and when reporting opinion of market
  value, state appraisers opinion of highest and
  best use
• State and explain any permitted departures from
  specific requirements of Standard 1 state
  exclusion of any usual valuation approaches and
  prominent use restriction that limits use of
  report to client and warns that appraisers
  opinions and conclusions set forth in report
  cannot be understood properly without additional
  information in appraisers work file
• Signed Certification

41
Self-Contained Appraisal Report Summary
Appraisal Report Restricted Use Appraisal
Report Assumptions and Limiting Conditions 1.
The appraiser is not responsible for matters of
a legal nature. 2. Any sketches in the
report are approximate dimensions. 3. The
appraiser is not required to give court
testimony unless prior arrangements have
been made.
42
Standards Rule 2-3 (binding requirement)

• Each written appraisal report must contain a
  signed certification similar to the
• following
• I certify that, to the best of my knowledge and
  belief
• --the statements of fact contained in this
  report are true and correct.
• --the reported analyses, opinions, and
  conclusions are limited only by the
• reported assumptions and limiting
  conditions, and are my personal,
• impartial, and unbiased professional
  analyses, opinions, and conclusions.
• --I have no (or the specified) present or
  prospective interest in the property
• that is subject of this report, and no
  (or the specified) personal interest
• with respect to parties involved.
• --I have no bias with respect to property that
  is subject of this report or
• parties involved with this assignment.
• --My engagement in this assignment was not
  contingent upon developing
• or reporting predetermined results.
• --My compensation for completing this
  assignment is not contingent upon
• the development or reporting of a
  predetermined value or direction in
• value that favors the cause of the client,
  the amount of the value opinion,
• the attainment of a stipulated result, or
  the occurrence of a subsequent
• event directly related to the intended use
  of this appraisal.

43
Standards Rule 2-4 (specific requirement)

• An oral real property appraisal report must, at a
  minimum,
• address the substantive matters set forth in
  Standards
• Rule 2-2(b).

44
Standard 3

• Appraisal Review, Development and Reporting
• Standard 3 states
• In performing an appraisal review assignment, an
  appraiser acting as a reviewer must develop and
  report a credible opinion as to the quality of
  another appraisers work and must clearly
  disclose the scope of work performed.
• USPAP refers to a review appraiser performing an
  appraisal review assignment
• as a reviewer.
• Reviewing work performed by someone else goes far
  beyond checking appraisal for completeness
• Reviewing, as used within context of Standard 3,
  requires preparation of separate report or file
  memorandum
• Review appraiser makes comments, renders
  opinions, and reaches conclusions
• Competency Rule of the USPAP applies to review
  appraiser as it applies to fee appraiser
• Reviewer must have knowledge and experience
  necessary to develop credible appraisal review
  opinions. Otherwise, in violation of Competency
  Rule.
• If reviewer undertakes to fit her or her
  conclusions, now governed by Standard 1 or
  Standard 2. Then reviewer would have to be in
  compliance with Standard 1 and Standard 2.
• Finally, if appraisal review report is misleading
  or fraudulent, the reviewer is in violation of
  Ethics Rule.
• Standard 3 is freestanding standard. Reviewing
  appraisal assignments and report of those results
  are both contained in a single standard.

45
Standards Rule 3-1 (binding requirement)

• For Appraisal Review, the reviewer must
• a) Identify reviewers client and intended
  users, intended use and purpose
• of review assignment
• b) Identify
• i) Subject of appraisal review
• ii) Effective date
• iii) Ownership interest appraised
• iv) Date of work under review and date
  of opinion or conclusion in work under review
• v) Appraiser(s) who completed work
• c) Identify scope of work
• d) Develop an opinion as to completeness of
  material under review
• e) Develop an opinion as to apparent adequacy
  and relevance of data and
• propriety of any adjustments to data
• f) Develop opinion as to appropriateness of
  appraisal methods and
• techniques used and reasons for any
  disagreements
• g) Develop opinion as to whether analyses,
  opinions, and conclusions are appropriate and
  reasonable, given scope of work applicable and
  develop reasons for any disagreement

46
Standards Rule 3-1, which is a binding
requirement, establishes the proper framework to
be followed in the review process. Reviewer must
have expertise and experience necessary to
correctly form opinion about accuracy and
completeness of appraisal report being reviewed.
Standard 3 provides for a difference in review
appraisers opinion of value from that rendered
in appraisal report, provided 1)
Reviewers scope of work in developing his or her
opinion must not be less than scope of
work applicable to original appraisal
assignment. 2) Reviewer may use additional
information available to him or her that
was not available to original appraiser in
development of his or her value opinion.
47
Standards Rule 3-2 (binding requirement)

• In reporting results, reviewer appraiser must
• a) Identify client by name or type and intended
  users the intended
• use of assignment results and purpose
  of assignment
• b) State information that must be identified in
  accordance with
• Standards Rule 3-1(b)
• c) State nature, extent, and detail of review
  process
• d) State opinions, reasons, and conclusions
  required in Standards
• Rule 3-1(d-g), given scope of work
• e) Include all known pertinent information
• f) Include signed certification in accordance
  with Standards Rule 3-3.

48
Standards Rule 3-3 (binding requirement)

• Each written appraisal review report must contain
  a signed certification that is similar in
• content to the following form
• I certify that, to the best of my knowledge and
  belief
• -- the facts and data reported by the reviewer
  and used in the review process are true and
  correct.
• --the analyses, opinions, and conclusions in
  this review report are limited only by the
  assumptions
• and limiting conditions stated in this
  review report and are my personal, impartial, and
  unbiased
• professional analyses, opinions, and
  conclusions.
• --I have no (or the specified) present or
  prospective interest in the property that is the
  subject of
• the work under review, and no (or the
  specified) personal interest with respect to the
  parties
• involved.
• --I have no bias with respect to the property
  that is the subject of the work under review or
  to the
• parties involved with this assignment.
  My engagement in this assignment was not
  contingent
• upon developing or reporting
  predetermined results.
• --my compensation is not contingent on an action
  or event resulting from the analyses, opinions,
• or conclusions in this review or from
  its use.
• --my analyses, opinions, and conclusions were
  developed and this review report was prepared in
• conformity with the Uniform Standards of
  Professional Appraisal Practice.
• --I have (or have not) made a personal
  inspection of the subject property of the work
  under review
• (If more than one person signs this
  certification, the certification must clearly
  specify which

49
Standard 2 contains the requirement of a
certification statement. Standard 3 contains a
certification statement by the review
appraiser. Standards Rule 3-4 (specific
requirement) An oral appraisal review
report must address the substantive matters
set forth in Standards Rule 3-2. Standards Rule
3-4 addresses the subject matter of oral
appraisal reviews. Simply stated, this standards
rule requires the reviewer giving an oral review
to follow the procedure outlined and explained in
Standards Rule 3-2.
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Standard 4- Real Property Appraisal Consulting,
Development

• Standard 4 states
• In developing a real property appraisal
  consulting assignment, an appraiser must identify
  the problem and scope of work necessary and
  correctly complete the research and analysis to
  produce credible results.
• Standard 4 is directed toward performance of a
  real property consulting
• assignment undertaken by an appraiser to develop,
  without advocacy, an
• analysis, recommendation, or opinion where at
  least one opinion of value is a
• component of the analysis leading to the
  assignment results. Standard 4
• recognizes that the phrase appraisal consulting
  involves and opinion of
• value but does not have an appraisal or an
  appraisal review as its primary
• purpose.
• All of the Preamble and Rules of the USPAP
  applies to Standard 4.

51
Standard 5 Real Property Appraisal Consulting,
Reporting

• Standard 5 states
• In reporting the results of a real property
  appraisal consulting assignment, an appraiser
  must communicate each analysis, opinion, and
  conclusion in a manner that is not misleading.
• Standard 6 Mass Appraisal, Development and
  Reporting
• Standard 6 states
• In developing a mass appraisal, an appraiser
  must be aware of, understand, and correctly
  employ those recognized methods and techniques
  necessary to produce and communicate credible
  mass appraisals.

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Standard 7 Personal Property Appraisal,
Development

• Standard 7 states
• In developing a personal property appraisal, an
  appraiser must identify the problem to be solved
  and the scope of the work necessary to solve the
  problem and correctly complete research and
  analysis necessary to produce a credible
  appraisal.
• The USPAP defines personal property as
  identifiable tangible objects that are
• considered by the general public as being
  personal, for example, furnishings,
• artwork, antiques, gems and jewelry,
  collectibles, machinery and equipment all
• tangible property that is not classified as real
  estate.
• Standard 8 Personal Property Appraisal,
  Reporting
• Standard 8 states
• In reporting the results of a personal property
  appraisal, an appraiser must communicate each
  analysis, opinion, and conclusion in a manner
  that is not misleading.

53
Standard 9 Business Appraisal, Development

• Standard 9 states
• In developing a business or intangible asset
  appraisal, an appraiser must identify the problem
  to be solved and the scope of work necessary to
  solve the problem and correctly complete the
  research and analysis steps necessary to produce
  a credible appraisal.
• Standard 10 Business Appraisal, Reporting
• Standard 10 states
• In reporting the results of a business or
  intangible asset appraisal, an appraiser must
  communicate each analysis, opinion, and
  conclusion in a manner that is not misleading.
• As is true with all applicable reporting
  standards, a written business appraisal must
• contain a signed certification statement similar
  in content to the certification contained in
• Standard 2.

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STATEMENTS

• SMT-1 Appraisal Review Standards Rule 3-1(g)
  Appraisal Review Adopted July 8, 1991 Retired
  September 15, 1999
• SMT-2 Discounted Cash Flow Analysis Adopted
  July 8, 1991 Revised September 16, 1998
• SMT-3 Retrospective Value Opinions Adopted July
  8, 1991 Revised September 16, 1998
• SMT-4 Prospective Value Opinions Adopted July
  8, 1991 Revised September 15, 1999
• SMT-5 Confidentiality Section of the Ethics Rule
  Adopted September 10, 1991 Revised September
  15, 1999 Retired June 12, 2001 Effective July
  1, 2001
• SMT-6 Reasonable Exposure Time in Real Property
  and Personal Property Market Value Opinions
  Adopted September 16, 1993 Revised September 15,
  1999

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Statements (continued)

• SMT-7 Permitted Departure from Specific
  Requirements in Real Property and Personal
  Property Appraisal Assignments Adopted March
  22, 1994 revised September 15, 1999
• SMT-8 Electronic Transmission of Reports
  Adopted July 18, 1995 Revised September 16,
  1998 Retired July 1, 2001
• SMT-9 Identification of the Clients Intended Use
  in Developing and Reporting Appraisal, Appraisal
  Review, or Appraisal Consulting Assignment
  Opinions and Conclusions Adopted August 27,
  1996 Revised September 15, 1999
• SMT-10 Assignments for Use by a Federally Insured
  Depository Institution in a Federally Related
  Transaction Adopted July 1, 2000