Chapter 26 Professional Appraisal Practice and Report Writing

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Chapter 26Professional Appraisal
PracticeandReport Writing
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Professional Practice

• USPAP
• Licensing Certification
• Professional Appraisal Organizations
• Reporting Report Writing

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USPAP

• Uniform Standards of Professional Appraisal
  Practice
• Established by the Appraisal Foundation (closely
  related to the Appraisal Institute)
• Standards Imposed by Federal Regulations
  governing ANY appraisal for a federally
  regulated transaction/institution
• Established by FIRREA (Financial Institutions
  Reform, Recovery and Enforcement Act of 1989)
  (SL Bailout)

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USPAP

• USPAP Requirements Govern
• What must be considered in an appraisal ANALYSIS
• What must be included in an appraisal REPORT
• Includes an Ethics Rule and Certification of
  Independence

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USPAP

• Ethics Rules Certification
• No interest in Property, Clients or Owners
• Appraisal reflects unbiased professional opinion
• Fees not based on any valuation conclusion or any
  circumstances resulting from the appraisal(not a
  contingent fee)
• Appraisal complies with USPAP
• Competent to perform the Appraisal

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USPAP

• Ethics Rules Certification
• Appraisal is the result of own work, not based on
  work by others (or disclosed)
• Disclosure of any significant assumptions
• Protect Appraiser-Client Confidentiality
• Not misleading or fraudulent
• Applied valuation approaches completely, in
  accordance with accepted professional practice

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Licensing Certification

• Licensing and Certification
• Required for all federally regulated transactions
• Bank Lending
• Some states require for ANY appraisal work
• Various levels
• Residential - Homes under a certain value amount
  and up to 4-unit apartments
• Certified General Appraiser - All commercial
  property, any property over 250,000
• State level licensing, rules vary by state, must
  by licensed by state

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Licensing Certification

• Requirements for Certified General Appraiser
• 180 classroom hours in real estate valuation
• 2 years (2,000 hours) appraisal experience
• Qualification exam
• Continuing education requirements
• Licensed by individual, not by company

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Professional Appraisal Organizations

• Appraisal Institute
• Most recognized professional organization
• Issues MAI (Member of Appraisal Institute)
  designation
• About 4 years experience
• About 7 courses (1 week each)
• Experience Reviews
• Comprehensive exam
• Demonstration Appraisal

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Other Appraisal Organizations

• Appraisal Institute Residential Designation
• SRA (Society of Residential Appraisers)
• ASA - American Society of Appraisers
• Various designations in Real Estate, Machinery
  and Equipment, Personal Property appraisal

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Reporting and Report Writing

• Minimum Requirements
• ID Property
• ID Property Interest
• State Purpose
• Define Value
• State effective Date
• Describe extent of data collecting
• Describe analysis, precedures

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Reporting and Report Writing

• Minimum Requirements
• State explain Highest and Best Use
• Include any useful approach
• Explain any excluded approach
• Explain special assumptions, additional
  information as appropriate, permitted departures
  from standards
• Include signed certification

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Types of Analysis

• Complete
• Thorough approach that complies with all
  standards
• Limited
• Skip some step or requirement of USPAP

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Types of Reports

• Oral - Rarely used
• Self-Contained
• Full description of data, analysis and
  conclusions
• Has all data and detail necessary to follow every
  adjustment
• Summary - permits complete understanding of
  analysis without all the detail
• Restricted - for client use only does not
  provide complete understanding of analysis

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