National Standards Guide USPAP

National Uniform Standards of
Professional Appraisal Practice

Day 1—Slide 2
Instructor
<Instructor name>
<phone>
<email>
<any other pertinent information>
INTRODUCTIONS
©2020 by The Appraisal Foundation

Day 1—Slide 3
Smoking areas
Please silence electronic devices
Audio/video recording is prohibited
Be considerate of those near you
GUIDELINES

Day 1—Slide 4
Break times and lunch
Restroom locations
Attendance sheet
Certificates
Examination
GENERAL INFORMATION

Day 1—Slide 5
15-Hour Course
2020-21

Learning Focus
Part 1. Introduction to USPAP
Part 2. PREAMBLE and When USPAP Applies
Part 3. DEFINITIONS
SECTION 1
Day 1—Slide 6
Part 1 - 1

Day 1—Slide 7
The Purpose of USPAP
Clients engage appraisers to resolve
appraisal problems…
USPAP exists to promote and maintain a
high level of public trust in appraisal
practice by establishing requirements for
appraisers.
USPAP (page 1)
INTRODUCTION Part 1 - 1

Day 1—Slide 8
PART 1
Introduction to USPAP

Day 1—Slide 9
The Purpose of USPAP
USPAP Provides
 A common basis for comparison.
 A reference source for all users of the
document.
 A basis for uniform enforcement.
 A reason for placing trust in services
performed by professional appraisers.
INTRODUCTION Part 1 - 2

Day 1—Slide 10
Preview Page Basics
Each preview page contains:
1. An overview of the session
2. Lesson Objectives
3. Learning Tips
PREVIEW

Day 1—Slide 11
INTRODUCTION TO USPAP Part 1 - 3

Day 1—Slide 12
History of Appraisal Standards
1980 and beyond
 Savings and loan crisis, mid-80s
through mid 90s.
 Ad Hoc Committee on Uniform
Standards of Professional
Appraisal Practice formed, 1986.

Day 1—Slide 13
1980 and beyond
 Initial work focus: defining
market value for real property
appraisals for use by federally-
related agencies.

Day 1—Slide 14
1980 and beyond
Three critical issues recognized by
committee. The necessity for:
 Credible appraisal practice.
 Ethical and competent
individuals.

Day 1—Slide 15
1980 and beyond
 Professional appraisal services
that would create public trust
in individual appraiser and in
appraisal practice.

Day 1—Slide 16
1980 and beyond
 1987, The Appraisal
Foundation was established to
implement USPAP as generally
accepted set of appraisal
standards for U.S.

Day 1—Slide 17
1980 and beyond
The Foundation not a regulatory agency;
provides tools that regulators use.
Foundation organized into three main
boards:
1. Board of Trustees (BOT)
2. Appraiser Qualifications Board (AQB)

Day 1—Slide 18
1980 and beyond
3. Appraisal Standards Board (ASB)

Day 1—Slide 19
1980 and beyond
One core function of ASC – monitor
requirements established by state
agencies for certification and licensing of
qualified appraisers.

Day 1—Slide 20
1980 and beyond
Mortgage scams and illegal flipping
preoccupied the lending and appraisal
industries in the 1990s.
Financing issues continued, expanding into
the 2000s, with appraiser identity theft
and tampering with appraisal records.

Day 1—Slide 21
1980 and beyond
2010: The Foundation began to provide
timely voluntary guidance (Valuation
Advisories) to appraisers on recognized
valuation methods and techniques.

Day 1—Slide 22
1980 and beyond
2019: 30th Anniversary of the passage of
Title XI of FIRREA. During this period,
public trust in the appraisal and valuation
profession has advanced, which underpins
the greatest economy in the world.

Day 1—Slide 23
USPAP created to promote and
maintain public trust
1. All appraisal disciplines
2. Cultivate trust
3. Concept of trust – attributes
4. Public demands ethical and
competent appraisal services
 Specialized knowledge
 Experience
 Objectivity
 Independence
 Integrity
INTRODUCTION TO USPAP
Part 1 - 6

Day 1—Slide 24
Public acceptance of USPAP
1. The U.S. Congress
2. Title XI of FIRREA
3. The Executive Branch
4. OMB
5. IRS
6. Private industry groups
Part 1 - 7

Day 1—Slide 25
Legal authority and adoption
 TAF is a private entity and has no legal
oversight or enforcement authority
 USPAP achieves authority by adoption,
citation, regulation, or agreement…
Part 1 - 7

Day 1—Slide 26
The structure of the Foundation
Foundation is not
 A government agency
 A professional appraisal organization
 A membership organization
The Appraisal Foundation
Part 1 - 7

Day 1—Slide 27
The Foundation is
 A non-profit organization
 Given authority by Congress
 An organization made up of other
organizations
Part 1 - 7

Day 1—Slide 28
The Fountain is governed by a Board of
Trustees (BOT) and has two independent
boards with Congressional authorization
 AQB
 ASB
Part 1 - 8

Day 1—Slide 29
The structure of the Fountain
The Fountain has three categories of
sponsors
 Appraisal Sponsors
 Affiliate Sponsors
 International Sponsors
Part 1 - 8

Day 1—Slide 30
The Foundation has two advisory councils
 TAFAC
 IAC
Part 1 - 8

Day 1—Slide 32
The role of the Foundation boards
Board of Trustees
Three primary functions
 Appoints members to its independent
boards
 Secures funding for operations
 Monitors performance and oversight
Part 1 - 10

Day 1—Slide 33
Additional BOT functions
 Provides information and guidance to
be developed and communicated on
pressing topics
Part 1 - 10

Day 1—Slide 34
Additional BOT functions
 Creates opportunities for interaction
with and input from profession leaders
through resource panels and use of
subject matter experts
Part 1 - 10

Day 1—Slide 35
Appraiser Qualifications Board
a. Establishes minimum education,
experience, and other criteria
b. Defines qualification criteria
c. Disseminates criteria
Part 1 - 10

Day 1—Slide 36
d. Creates and maintains examinations
e. Administers National USPAP Courses
f. Certifies USPAP instructors
Part 1 - 10

Day 1—Slide 37
g. Administers Course Approval Program
(CAP)
h. Administers review of real estate
degree programs
i. Periodically issues Q&As on
qualifications
Part 1 - 11

Day 1—Slide 38
Appraisal Standards Board
 Revises and promulgates USPAP
 Responsible for the content of USPAP
and other communications
Part 1 - 11

Day 1—Slide 39
Appraisal Standards Board
 Periodically writes Q&As in response to
questions received from the public
 Reviews Q&As and includes those
relevant into USPAP publications
Part 1 - 11

Day 1—Slide 40
The Appraisal Subcommittee
Created as a result of FIRREA
1. ASC operates within FFIEC
2. ASC has seven members
Not part of the Foundation, but authorized to
monitor
ASC oversees state appraisal licensing and
certification agencies
Part 1 - 12

Day 1—Slide 41
State Appraiser Regulatory Agencies
The AQB & ASB establish minimum:
AQB – qualification criteria; ASB – appraisal standards
State appraiser regulatory agencies have complete
authority for enforcement
States are independent
State agencies
 Typically governed by a board
 Generally appointed by the governor
 Often have public members
 Administer AMC Registries
Part 1 - 13

The Appraisal Foundation and the Appraisal Subcommittee
©2020 42

Day 1—Slide 43
The Structure of USPAP
Layout
1. PREAMBLE
2. DEFINITIONS
3. RULES
4. STANDARDS
5. STATEMENTS (No active)
 ETHICS
 RECORD KEEPING
 COMPETENCY
 SCOPE OF WORK
 JURISDICTIONAL
EXCEPTION
Part 1 - 16

Day 1—Slide 44
The USPAP blueprint
1. DEFINITIONS
2. PREAMBLE
It is essential that appraisers develop
and communicate their analyses,
opinions, and conclusions …in a manner
that is meaningful and not misleading.
Part 1 - 16

Day 1—Slide 45
The USPAP blueprint (Rules)
3. ETHICS
4. COMPETENCY
5. RECORD KEEPING
6. SCOPE OF WORK
7. JURISDICTIONAL EXCEPTION
Part 1 - 16

Day 1—Slide 46
The USPAP blueprint (Standards)
 STANDARDS 1 & 2 – Real Property Appraisal
 STANDARDS 3 & 4 – Appraisal Review
 STANDARDS 5 & 6 – Mass Appraisal
 STANDARDS 7 & 8 – Personal Property Appraisal
 STANDARDS 9 & 10 – Business Appraisal
Part 1 - 17

Day 1—Slide 47
The USPAP blueprint (Comments)
Comments are an integral part of USPAP
These extensions … provide interpretation
and establish the context and conditions for
application.
Part 1 - 17

Day 1—Slide 48
Other Communications
Publication includes guidance material in the
form of Advisory Opinions and Frequently
Asked Questions
NOT part of USPAP
Part 1 - 17

Day 1—Slide 49
STEP 2 Determine Scope of Work
USPAP and the Appraisal Process
STEP 1 Definition of the Problem
Identify
client and
other
intended
users
Identify
the
intended
use
Identify the
type and
definition of
value
Effective
date of
the
opinion
Identify the
relevant
characteristics
of the property
Assignment conditions*
Extraordinary
Assumptions
Hypothetical
Conditions
Part 1 - 19

Day 1—Slide 50
STEP 3 Data Collection and Analysis
Market Analysis
Demand studies
Supply studies
Marketability studies
Highest and Best Use Analysis
Site as though vacant
Ideal improvement
Property as improved
STEP 4 Application of the Approaches to Value
Cost Sales Comparison Income Capitalization
Part 1 - 19

Day 1—Slide 51
STEP 5
Reconciliation of Value Indications and
Final Opinion of Value
STEP 6 Report of Defined Value Opinions
Part 1 - 19

Day 1—Slide 52
The Appraisal Process has two distinct
types of activity…
Part 1 - 20

Day 1—Slide 53
Part 1 - 21

Day 1—Slide 54
PART 2
Preamble and
When USPAP Applies

Day 1—Slide 55
PREAMBLE & When USPAP Applies
Part 2 - 23

Day 1—Slide 56
PREAMBLE
Purpose of USPAP
 To promote and maintain a high level of
public trust.
 To establish minimum requirements.
Part 2 - 25

Day 1—Slide 57
Who benefits from USPAP
 Providers of appraisal services.
 Users of appraisal services.
PREAMBLE
Part 2 - 25

Day 1—Slide 58
When USPAP applies
 Compliance is required…
when obligated by:
 Law
 Regulation
 Agreement
PREAMBLE
Part 2 - 25

Day 1—Slide 59
USPAP contents…
Services covered by USPAP
 Appraisal
 Appraisal Review
 Other services when representing
oneself as an appraiser
PREAMBLE
Part 2 - 25

Day 1—Slide 60
Property types
 Tangible
 Intangible
PREAMBLE
Part 2 - 26

Day 1—Slide 61
When Does USPAP Apply
Compliance
 MUST comply when required by law,
regulation, or agreement
 SHOULD comply when representing
oneself as an appraiser
Part 2 - 26

Day 1—Slide 62
Compliance
 Review definitions:
Valuation Services
Appraisal Practice
Part 2 - 26

Day 1—Slide 63
Acting “as an appraiser” means
 Representing oneself as such
 Expectation of competence
 Independent, impartial, and objective
Part 2 - 28

Day 1—Slide 64
Expectation for compliance
 Maintain public trust
 Adhere to definition of “appraiser”
 Meet client & intended user
expectations when acting as appraiser
Part 2 - 28

Day 1—Slide 65
Responsibility regarding expectations
 Intended users’ expectations
 Outside appraisal practice, do not
misrepresent
 Do not violate public trust
Part 2 - 28

Day 1—Slide 66
USPAP compliance obligations
 Independent, impartial, and objective
 Comply with ETHICS RULE in all
appraisal practice
 Maintain information to support
opinions for RECORD KEEPING RULE
Part 2 - 28

Day 1—Slide 67
 Comply with COMPETENCY RULE &
JURISDICTIONAL EXCEPTION RULE in all
assignments
 In appraisal or appraisal review; must
comply with all Rules and applicable
STANDARDS
Part 2 - 28

Day 1—Slide 68
 Services for Appraisal Practice with no
performance standards are:
Providing general sales data
Measuring services
Writing Appraisal-Related
Articles
Verifying information
Analyzing elements
Part 2 - 29

Day 1—Slide 69
USPAP obligations for services outside
appraisal practice
 Ensure that intended users are not
misled regarding one's role.
Additional guidance from AO-21
Part 2 - 29

Day 1—Slide 70
Part 2 - 30

Day 1—Slide 71
Part 2 Review Quiz
1. Appraisal Practice
2. Mislead
3. Record keeping or scope of work
4. Appraisal
Appraisal Review
Other services
5. Subset
Part 2 - 32

Day 1—Slide 72
Part 2 Review Quiz
6. FALSE
7. TRUE
8. FALSE
9. TRUE
10. TRUE
Part 2 - 33

Day 1—Slide 73
PART 3
USPAP Definitions

Day 1—Slide 74
USPAP DEFINITIONS
Part 3 - 34

Day 1—Slide 75
Why define certain terms?
 USPAP defines essential terms
 Terms have distinct meanings
 Does USPAP define market value?
USPAP DEFINITIONS
Definitions
Part 3 - 35

Day 1—Slide 76
Definitions
Key terms to know
 All terms listed are important
 Some are simple; some complex
 Overview of key terms
USPAP DEFINITIONS
Part 3 - 35

Day 1—Slide 77
Definitions in contrast
 Bias
A preference or inclination that precludes an
appraiser’s impartiality, independence, or
objectivity in an assignment.
USPAP DEFINITIONS
Part 3 - 37
Definitions

Day 1—Slide 78
Discussion Example 1
Should the appraiser change his opinion
of value since it is less than a 1%
difference?
No
An appraiser must perform assignments without
accommodation of personal interests. Also, an
appraiser must not advocate.
USPAP DEFINITIONS
Part 3 - 37

Day 1—Slide 79
 Assumptions
 Extraordinary assumptions
 Hypothetical conditions
Review each
USPAP DEFINITIONS
Part 3 - 37
Definitions

Day 1—Slide 80
What type of assignment condition
should the appraiser use?
Hypothetical condition
The property as if repaired does not currently
exist.
USPAP DEFINITIONS
Part 3 - 38

Day 1—Slide 81
What type of assignment condition
should the appraiser use to achieve a
current value opinion?
Extraordinary Assumption
As of the date of value, the mold is unknown and
it is reasonable to believe the condition is true.
USPAP DEFINITIONS
Part 3 - 38

Day 1—Slide 82
 Exposure Time
Length of time that the property interest
would have been offered on the market prior to
a hypothetical sale.
Always occurs prior to the effective appraisal
date.
Definitions
USPAP DEFINITIONS
Part 3 - 39

Day 1—Slide 83
 Cost, price, and value
Cost is a fact or an estimate of fact.
Price, once stated, is always a fact.
Value is an opinion.
USPAP DEFINITIONS
Definitions
Part 3 - 39

Day 1—Slide 84
Identify each of the three components:
a) Fact
b) Estimate of fact
c) Opinion
1.9 million
Reproduction cost
2 million
USPAP DEFINITIONS
Part 3 - 39

Day 1—Slide 85
 What is the definition of an
appraiser?
One who is expected to perform
valuation services competently and in a
manner that is independent, impartial,
and objective.
Definitions
USPAP DEFINITIONS
Part 3 - 40

Day 1—Slide 86
 Client
the party or parties (i.e., individual,
group, or entity) who engage an appraiser
by employment or contract in a specific
assignment, whether directly or through
an agent.
Definitions
USPAP DEFINITIONS
Part 3 - 40

Day 1—Slide 87
 Assignment Conditions
Assumptions, extraordinary assumptions,
hypothetical conditions, laws and
regulations, jurisdictional exceptions, and
other conditions that affect the scope
of work.
Definitions
USPAP DEFINITIONS
Part 3 - 40

Day 1—Slide 88
 Assignment
 Assignment results
 Confidential information
Review each
Definitions
USPAP DEFINITIONS
Part 3 - 40

Day 1—Slide 89
 Intended use
 Intended user
Review each
Definitions
USPAP DEFINITIONS
Part 3 - 41

Day 1—Slide 90
Is it ethical to omit the AMC’s name as
the client on my reports?
Yes
If the AMC is acting as an agent for a lender,
identifying only the lender as your client is
acceptable.
FAQ 129
USPAP DEFINITIONS
Part 3 - 41

Day 1—Slide 91
 Report
 Signature
Review each
Definitions
USPAP DEFINITIONS
Part 3 - 41

Day 1—Slide 92
 Workfile
Data, information, and documentation
necessary to support the appraiser’s
opinions and conclusions and to show
compliance with USPAP.
Definitions
USPAP DEFINITIONS
Part 3 - 42

Day 1—Slide 93
How should an appraiser handle this
type of request?
This is an additional report – oral report. A
summary must be included in the workfile.
Workfile must contain a true copy of the
written report.
USPAP DEFINITIONS
Part 3 - 42

Day 1—Slide 94
Appraisal practice definitions
 Valuation Service
 Appraisal Practice
Review each
Definitions
USPAP DEFINITIONS
Part 3 - 42

Day 1—Slide 95
Valuation Services
Don’t Misrepresents
Appraisal Practice
(Acting as an Appraiser)
USPAP Obligations
Appraisal
Appraisal Review
STANDARDS 1−10
Apply
USPAP DEFINITIONS
Part 3 - 42

Day 1—Slide 96
Is this assignment under valuation
services and/or appraisal practice?
Valuation service
The client does not have expectations that the
broker will act in the role of an appraiser.
USPAP DEFINITIONS
Part 3 - 43

Day 1—Slide 97
Appraisal practice definitions
 Scope of work
Type & extent of research and analyses
Determine scope of work for credible results
Must disclose
Definitions
USPAP DEFINITIONS
Part 3 - 44

Day 1—Slide 98
Standards and Standards Rules
Standards: a benchmark or a set of criteria
used to measure performance
Standards Rules: identify the requirements
applicable to a Standard
Definitions
USPAP DEFINITIONS
Part 3 - 44

Day 1—Slide 99
USPAP DEFINITIONS
Part 3 - 45

Day 1—Slide 100
Part 3 Review Quiz
1. The client
2. Hypothetical condition
3. Appraisal practice
4. Workfile
5. Extraordinary assumption
USPAP DEFINITIONS
Part 3 - 46

Day 1—Slide 101
Part 3 Review Quiz
6. Bias
7. Price
8. Valuation service(s)
9. Appraisal
10. Value
USPAP DEFINITIONS
Part 3 - 46

Day 1—Slide 102
1. C
2. B
3. A
4. D
5. A
6. C
7. D
8. A
9. A
10.D
11.C
12.D
13.B
14.A
15.D
Answers
Section Practice Test
Part 3 - 47

Day 1—Slide 103
Learning Focus
Part 4. ETHICS RULE,
RECORD KEEPING RULE, and
COMPETENCY RULE
Part 5. SCOPE OF WORK RULE
Part 6. JURISDICTIONAL EXCEPTION RULE
SECTION 2 Part 4 - 51

Day 1—Slide 104
PART 4
ETHICS RULE,
RECORD KEEPING RULE, &
COMPETENCY RULE

Day 1—Slide 105
ETHICS RULE, RECORD KEEPING RULE,
and COMPETENCY RULE
Part 4 - 52

Day 1—Slide 106
Overview
 An appraiser must:
1. Observe ethical standards
2. Not misrepresent role
3. Certify compliance
4. Communicate without misleading
misleading
ETHICS RULE
and COMPETENCY RULE
Part 4 - 53

Day 1—Slide 107
Overview
 Sections of Rule
1. Conduct
2. Management
3. Confidentiality
ETHICS RULE
and COMPETENCY RULE
Part 4 - 53

Day 1—Slide 108
Overview
 Activities covered
1. General conduct
2. Development
3. Communication
ETHICS RULE
and COMPETENCY RULE
Part 4 - 53

Day 1—Slide 109
Conduct
 Conduct - Appraiser must:
1. Perform ethically & competently
2. Perform in accordance with USPAP
3. Not engage in criminal conduct
4. Not purposely violate RECORD
KEEPING RULE
ETHICS RULE
and COMPETENCY RULE
Part 4 - 54

Day 1—Slide 110
Conduct
 Development - Appraiser must:
1. Perform independently,
impartially, objectively
2. Must not perform with bias
3. Not advocate
ETHICS RULE
and COMPETENCY RULE
Part 4 - 54

Day 1—Slide 111
Conduct
 Development - Appraiser must:
4. Not agree to perform assignments
with predetermined opinions
5. Not misrepresent role
6. Not use unsupported information
7. Not perform in a negligent manner
ETHICS RULE
and COMPETENCY RULE
Part 4 - 54

Day 1—Slide 112
Conduct
 Communication - Appraiser must:
1. Not mislead or defraud
2. Not use misleading report
3. Not allow another appraiser to
communicate a misleading report
ETHICS RULE
and COMPETENCY RULE
Part 4 - 54

Day 1—Slide 113
Conduct
 Disclosure obligations
1. Current or prospective interest
2. Services within three years
3. Agreed not to disclose appraised
property; must decline
assignments for three years
ETHICS RULE
and COMPETENCY RULE
Part 4 - 55

Day 1—Slide 114
Conduct
 Disclose in subsequent report
certification; no (or specified) services
 If no appraisal or review report, only
initial disclosure required
ETHICS RULE
and COMPETENCY RULE
Part 4 - 55

Day 1—Slide 115
Is this a violation of USPAP?
A contract price can be a good indicator,
but it’s not always the case.
Credible market data must be the basis.
FAQ 28
and COMPETENCY RULE
Part 4 - 55

Day 1—Slide 116
Do I have to disclose the number of
appraisal services?
Yes
FAQ 18
and COMPETENCY RULE
Part 4 - 55

Day 1—Slide 117
Does this really mean the appraiser can’t be
engaged by this same client, on this property,
within the three-year period?
Generally No.
FAQ 16
and COMPETENCY RULE
Part 4 - 56

Day 1—Slide 118
Management – Appraiser must
 Disclose anything paid or given in
connection with the procurement
of assignment
ETHICS RULE
and COMPETENCY RULE
Part 4 - 56

Day 1—Slide 119
 Not agree to do any work based
on the following contingencies:
Reporting a predetermined result
A directive that advocates for client
Amount of value opinion
Attainment of stipulated result
An event related to opinions
ETHICS RULE
and COMPETENCY RULE
Part 4 - 56

Day 1—Slide 120
 Not advertise in a false or misleading
manner
 Certify compliance with USPAP
 Not affix another’s signature without
permission
ETHICS RULE
and COMPETENCY RULE
Part 4 - 56

Day 1—Slide 121
Is it ethical to reduce the fee ?
No
Management section of ETHICS RULE
FAQ 38
and COMPETENCY RULE
Part 4 - 57

Day 1—Slide 122
Is it a violation of USPAP to quote fees
in this manner?
Yes
Management section of ETHICS RULE
FAQ 40
and COMPETENCY RULE
Part 4 - 57

Day 1—Slide 123
Confidentiality – Appraiser must
 Protect the confidentiality of the
relationship
 Act in good faith with regard to the client
interests including confidential
information & assignment results
 Comply with all privacy laws and
regulations
ETHICS RULE
and COMPETENCY RULE
Part 4 - 57

Day 1—Slide 124
 Must not disclose confidential
information or assignments results to
anyone, other than:
Client
Parties authorized by client
State regulatory agencies
Third parties by law
Peer review committee
ETHICS RULE
and COMPETENCY RULE
Part 4 - 58

Day 1—Slide 125
 Take reasonable steps to safeguard
access by unauthorized individuals.
 Ensure employees, coworkers, sub-
contractors are aware of prohibitions
on disclosure of confidential
information or assignment results.
ETHICS RULE
and COMPETENCY RULE
Part 4 - 58

Day 1—Slide 126
Assignment Results & Confidentiality
 Assignment results are the opinions or
conclusions of the appraiser specific to
an assignment. These are confidential.
 Physical characteristics are not
assignment results.
ETHICS RULE
and COMPETENCY RULE
Part 4 - 58

Day 1—Slide 127
Assignment Results & Confidentiality
 Appraiser may share information
(but not opinions) regarding physical
characteristics, except when
characteristics meet definition of
confidential information.
ETHICS RULE
and COMPETENCY RULE
Part 4 - 58

Day 1—Slide 128
Does this mean that physical
characteristics are not confidential?
Yes, because physical characteristics are
not assignment results, they are not
confidential unless … FAQ 75
and COMPETENCY RULE
Part 4 - 59

Day 1—Slide 129
Can you distinguish which of the underlined parts
are physical characteristics, and which parts are
assignment results?
Physical Characteristics: address, age,
appliances, fixtures, heat/ac, bedrooms and
baths, color of walls
Assignment Result Opinions: functional
problem, dated décor. FAQ 76
and COMPETENCY RULE
Part 4 - 59

Day 1—Slide 130
What are reasonable steps?
USPAP cannot specify steps or actions an
appraiser must take. USPAP can only require
the appraiser to exercise sound judgment.
Appraisers must seek reasonable and
practical solutions to maintaining client
confidentiality. FAQ 81
and COMPETENCY RULE
Part 4 - 60

Day 1—Slide 131
Overview
 Workfile
1. Must prepare for appraisal & appraisal review
assignments
2. Must be in existence prior to report or other
communication of assignment results
3. Written summary of oral report
RECORD KEEPING RULE
and COMPETENCY RULE
Part 4 - 60

Day 1—Slide 132
Overview
 Workfile must include
1. Identity of client & intended users
2. True copy of report
3. Summaries of oral reports or testimony
with signed & dated certification
4. Support and evidence of compliance
RECORD KEEPING RULE
and COMPETENCY RULE
Part 4 - 60

Day 1—Slide 133
Overview
 Workfile retention
1. At least 5 years
2. Or 2 years after final disposition if the
appraiser provided testimony
3. Whichever expires last
RECORD KEEPING RULE
and COMPETENCY RULE
Part 4 - 61

Day 1—Slide 134
Overview
 Workfile retention
 Must have custody or appropriate
arrangements
 Must allow retrieval by other
appraisers with workfile
obligations for:
State regulatory agencies
Compliance with law
Peer review committee
Compliance with retrieval
RECORD KEEPING RULE
and COMPETENCY RULE
Part 4 - 61

Day 1—Slide 135
Overview
Knowingly or willingly failing to
comply with this Rule =
RECORD KEEPING RULE
and COMPETENCY RULE
Part 4 - 61

Day 1—Slide 136
Does that agreement have to be in
writing?
No
The agreement can be written or oral.
FAQ 92
and COMPETENCY RULE
Part 4 - 62

Day 1—Slide 137
How is my significant assistance
recognized when there is no written
report?
The summary of an oral report must be in the
workfile, including who contributed.
FAQ 281
and COMPETENCY RULE
Part 4 - 62

Day 1—Slide 138
Is this true?
No
FAQ 94
and COMPETENCY RULE
Part 4 - 63

Day 1—Slide 139
Does a true copy have to include a
signature?
Yes
FAQ 93
and COMPETENCY RULE
Part 4 - 63

Day 1—Slide 140
Overview
 3 sections
 Competency may apply to:
1. A specific property or asset
2. A market
3. A geographic area
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 64

Day 1—Slide 141
Overview
 Competency may apply to:
4. An intended use
5. Laws or regulations
6. An analytical method
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 64

Day 1—Slide 142
Who’s correct (client/appraiser)?
USPAP violation?
The client
It’s the appraiser responsibility to know all
the laws and regulations applicable to an
assignment.
and COMPETENCY RULE
Part 4 - 65

Day 1—Slide 143
Being Competent requires
 Properly identify the problem
 Knowledge and experience to complete
 Recognize & comply with laws &
regulations
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 65

Day 1—Slide 144
Acquiring Competency requires
 Disclosing lack of knowledge
 Taking steps to complete competently
 Describing both in the report
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 66

Day 1—Slide 145
Acquiring Competency requires
 Lack of knowledge discovered during
the process, you must:
Notify client
Take steps to complete competently
Describe lack of knowledge & steps in
report
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 66

Day 1—Slide 146
Lack of Competency
 If you cannot complete assignment
competently, you MUST decline or
withdraw from assignment.
COMPETENCY RULE
and COMPETENCY RULE
Part 4 - 66

Day 1—Slide 147
Has the appraiser complied with
USPAP?
No
The COMPETENCY RULE requires the
disclosure in the report
and COMPETENCY RULE
Part 4 - 67

Day 1—Slide 148
Is it permissible for me to agree to
perform an assignment under these
conditions?
COMPETENCY RULE
Geographical Competency?
FAQ 112
and COMPETENCY RULE
Part 4 - 67

Day 1—Slide 149
and COMPETENCY RULE
Part 4 - 69

Day 1—Slide 150
Part 4 Review Quiz
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
6. TRUE
7. FALSE
8. FALSE
9. TRUE
10. FALSE
and COMPETENCY RULE
Part 4 - 70

Day 1—Slide 151
PART 5
SCOPE OF WORK RULE

Day 1—Slide 152
SCOPE OF WORK RULE
Part 5 - 71

Day 1—Slide 153
Three-section Rule
 Problem Identification
 Scope of Work Acceptability
 Disclosure Obligations
SCOPE OF WORK RULE
OVERVIEW
Part 5 - 73

Day 1—Slide 154
Overview
 Scope of work includes
1. Extent of identification
2. Extent of inspection
3. Type & extent of data researched
4. Type & extent of analyses applied
SCOPE OF WORK RULE
OVERVIEW
Part 5 - 73

Day 1—Slide 155
Overview
 Broad flexibility and significant
responsibility
 Credible results require support
 Credibility is measured in context of
intended use
SCOPE OF WORK RULE
OVERVIEW
Part 5 - 73

Day 1—Slide 156
Assignment Elements
 Client and any other intended users
 Intended use
 Type and definition of value
 Effective date
 Subject and relevant characteristics
 Assignment conditions
SCOPE OF WORK RULE
Problem Identification
Part 5 - 74

Day 1—Slide 157
Assignment elements provide the basis for
type and extent of research
Communication with client establishes most
information except relevant characteristics
SCOPE OF WORK RULE
Part 5 - 74

Day 1—Slide 158
Assignment conditions
 Assumptions
 Extraordinary assumptions
 Hypothetical conditions
 Laws and regulations
 Jurisdictional exceptions
 Other conditions
SCOPE OF WORK RULE
Part 5 - 74

Day 1—Slide 159
Acceptable when meets or exceeds
 Expectations of intended users for
similar assignments
 Appraiser’s peers’ actions in similar
assignment
SCOPE OF WORK RULE
Acceptability
Part 5 - 74

Day 1—Slide 160
Process
 Determination is an ongoing process
 Changes might necessitate
reconsideration
 Must be prepared to support exclusions
that would appear relevant
SCOPE OF WORK RULE
Acceptability
Part 5 - 75

Day 1—Slide 161
Assignment conditions
 Must not limit scope of work so much that
assignment results will not be credible
 Must withdraw if conditions limit research
unless:
 Must not allow intended use or client’s
objectives to cause bias
Modify conditions or use an
extraordinary assumption
SCOPE OF WORK RULE
Acceptability
Part 5 - 75

Day 1—Slide 162
Report must contain information to allow intended
users to understand scope of work
May require disclosure of research or analysis not
performed
No requirement to be in a defined or specific
section
SCOPE OF WORK RULE
Disclosure Requirements
Part 5 - 76

Day 1—Slide 163
Does this affect the scope of work?
Yes
Appraiser can continue if they can achieve
credible results.
Report would state number of units
inspected. (AO-28, Illustration 1)
SCOPE OF WORK RULE
Part 5 - 76

Day 1—Slide 164
What should the appraiser do?
Depends on whether the appraiser can
achieve credible results.
Is it a “trust me” statement, or has the
client already done the research? (AO-
28, Illustration 5)
SCOPE OF WORK RULE
Part 5 - 77

Day 1—Slide 165
What should the appraiser do?
Reconsider the problem and the scope
of work.
Consider the income approach?
COMPETENCY RULE? (AO-28,
Illustration 6)
SCOPE OF WORK RULE
Part 5 - 77

Day 1—Slide 166
Would the assignments require the same
scope of work?
No
Differences in intended use and appraisal
problem.
FHA; additional inspection requirements (AO-
29, Illustration 1)
SCOPE OF WORK RULE
Part 5 - 78

Day 1—Slide 167
What is the appropriate course of
action?
Modify the assignment for time
Or
Withdraw from the assignment
(AO-29, Illustration 4)
SCOPE OF WORK RULE
Part 5 - 78

Day 1—Slide 168
SCOPE OF WORK RULE
Part 5 - 79

Day 1—Slide 169
1. Ongoing
2. Identify
3. Bias
4. Flexibility /
Responsibility
5. Sufficient information
6. True
7. True
8. False
9. True
10.True
SCOPE OF WORK RULE
Part 5 Review Quiz
Part 5 - 80

Day 1—Slide 170
PART 6
JURISDICTIONAL
EXCEPTION RULE

Day 1—Slide 171
JURISDICTIONAL EXCEPTION RULE
Part 6 - 81

Day 1—Slide 172
Overview
 Defined as:
Jurisdictional Exception Rule
An assignment condition established by
applicable law or regulation, which
precludes an appraiser from complying
with a part of USPAP.
Part 6 - 82

Day 1—Slide 173
Overview
 Rule states:
If any applicable law or regulation
precludes compliance with any part of
USPAP, only that part of USPAP
becomes void for that assignment.
Part 6 - 82

Day 1—Slide 174
Application
 Four requirements:
Identify the law or regulation
Comply with the law
Clearly disclose voided portion of USPAP
Cite the law in the report
Part 6 - 82

Day 1—Slide 175
Application
 When followed; no USPAP violation
 Law includes:
Constitutions
Legislative and court law
Administrative rules and ordinances
Part 6 - 82

Day 1—Slide 176
Application
 Includes rules having legal force
 Does not include instructions from
client or attorney
Part 6 - 83

Day 1—Slide 177
Does this create a jurisdictional exception to
the Confidentiality section of the
ETHICS RULE?
No
“persons authorized by client or
due process of law”
FAQ 126
Part 6 - 83

Day 1—Slide 178
How should the appraiser respond?
Client instructions do not establish a
jurisdictional exception.
Rule not applicable unless compliance with
USPAP is precluded by law or regulation of a
jurisdiction.
Part 6 - 84

Day 1—Slide 179
Test Yourself. Jurisdictional exception or
not?
1. You have been asked to use a specific
definition in an assignment.
2. State regulations say you must keep
you workfile for 6 years.
Part 6 - Bonus

Day 1—Slide 180
Test Yourself. Jurisdictional exception or
not?
3. The probate court pays appraisers
based on the value of the property.
4. In an eminent domain case, the sate
agency client does not want you to
consider the future improvements.
Part 6 - Bonus

Day 1—Slide 181
Jurisdictional exception or not? How did
you do?
1. No. Is an assignment element.
2. No. Is a management issue.
3. Yes. Support by citation.
4. No. Is an assignment element.
Part 6 - Bonus

Day 1—Slide 182
Part 6 - 89

Day 1—Slide 183
1. C
2. D
3. B
4. B
5. D
6. D
7. B
8. C
9. A
10.D
11.B
12.C
13.D
14.B
15.A
Section Practice Test
Answers
Part 6 - 90

National Standards Guide USPAP

Recommended

Recommended

More Related Content

Similar to National Standards Guide USPAP

Similar to National Standards Guide USPAP (20)

Recently uploaded

Recently uploaded (20)

National Standards Guide USPAP