The Uniform Standards of Professional Appraisal Practice (USPAP) can be considered the quality control standards applicable for real property, personal property, intangible assets, and business valuation appraisal analysis and reports in the United States and its territories. The Appraisal Standards Board (ASB) develops, interprets and amends the USPAP and, as such, is currently considering changes to the 2018-19 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) with the goal of improving understanding and enforcement. USPAP is historically updated and/or revised every two years. With the interest of keeping our clients and appraisers aware of the proposed changes, Valuation Management Group’s Commercial Quality Control department recently reviewed the Second Exposure Draft of proposed changes for the 2018-2019 Edition of USPAP. Some of the noted proposed changes are as follows:
- Record Keeping Rule (addition of explanation) – “A work file in support of a Restricted Appraisal Report or an oral appraisal report must be sufficient for the appraiser to produce an Appraisal Report. A work file in support of an oral appraisal review report must be sufficient for the appraiser to produce an Appraisal Review Report.”
- Definitions of Assumption and Extraordinary Assumption – the definitions are proposed for refinement in order to aid in clarity as to the differences between an assumption and an extraordinary assumption.
- Standard 3 – The ASB has proposed to revise the definition of appraisal review and to divide the current Standard 3 which includes both review development and reporting into Standard 3, Appraisal Review, Development and Standard 4 (previously retired), Appraisal Review, and Reporting.
- Standard 6 – The ASB has proposed to divide the current Standard 5 which includes both mass appraisal development and reporting into Standard 5 (previously retired), Mass Appraisal, Development and Standard 6, Mass Appraisal, Reporting.
- Advisory Opinion 37 is proposed as a new advisory opinion relating to Computer Assisted Valuation Tools.
- Already existing Advisory Opinion 21 has a new illustration proposed to aid in the clarity of the relationship between valuation services and appraisal practice.
- Edits are proposed to both Advisory Opinion 31, Assignments Involving More than One Appraiser and Advisory Opinion 1, Sales History
Before year end, the ASB intends to issue a Third Exposure Draft for comments from interested parties. Any revisions to the 2018-2019 edition of USPAP will be adopted by the ASB at its public meeting in early 2017. Any revisions would become effective on January 1, 2018.
Valuation Management Group is a national, residential and commercial appraisal management services company that manages the appraisal process, including the appraisal review, for financial institutions, banks, mortgage bankers, and credit unions. VMG offers a full array of commercial and residential appraisal products and services. The company’s goal is to take the appraisal process from ordinary to extraordinary for its clients and appraisers.