Collateral DNA Appraisal Score

[sputnam]

You are doing a review under current USPAP standards although the report you are reviewing only has to meet the standards as of 2003. The wording is applicable.

Michigan is correct. You also need to include the subject's estimated exposure time. See FAQ 143.

 

[andrew81]

USPAP 2012-2013 FREQUENTLY ASKED QUESTIONS

139. COMPETENCY AS OF EFFECTIVE DATE OF THE APPRAISAL
Question: Can an appraiser prepare a retrospective appraisal, with an effective date of
appraisal as of five years ago, if that appraiser wasn’t even an appraiser five years
ago?
Response: Yes. The appraiser must comply with the COMPETENCY RULE at the time the appraiser
develops the appraisal, regardless of the effective date of the appraisal (date of value). If the
appraiser is to develop a value opinion, be it retrospective, prospective, or current, the appraiser
must be able to deal with the nuances of such an assignment at the time he or she is performing the
assignment (e.g., to research data associated with the retrospective, prospective, or current
effective date of the appraisal and to analyze the data in light of market conditions as of that date).
It is not necessary for the appraiser to be, or to have been, a competent appraiser as of the effective
date of the appraisal.
An appraiser could develop a retrospective appraisal with an effective date of the appraisal that is
prior to the appraiser’s own date of birth. Likewise, an appraiser could develop a prospective
appraisal with an effective date of the appraisal that occurs after the date of his or her own death.
These would be legitimate assignments that could be completed according to USPAP. In such
cases the appraiser could not be considered to be a competent appraiser as of the effective dates of
those appraisals.

143. USPAP COMPLIANCE IN RETROSPECTIVE APPRAISALS
Question: When preparing an assignment with a retrospective date of value, should the
appraiser comply with the USPAP in effect as of the date of the appraisal or as of
the date of report?
Response: Appraisers must comply with the USPAP edition in effect as of the date of the report. Only the
data and the analyses of that date should be considered on a retrospective basis, not the Standards
under which the assignment is performed.

144. RETROSPECTIVE APPRAISAL ASSIGNMENTS
Question: I was recently asked to complete a retrospective market value appraisal for which
the effective date of the appraisal is two years prior to the date of the report. In
researching this assignment I discovered several comparable sales that were listed
and placed under contract prior to the effective date of the appraisal, but actually
sold well after the effective date. Would it be appropriate to use only these sales in
my sales comparison approach to value?
Response: In a retrospective appraisal the analysis should reflect the market conditions that existed on the
effective date of the appraisal. Only using comparable sales information that was not available to
the market place, or did not exist as of the effective date of the appraisal could be misleading
because it would not reflect information available to the marketplace during that time period.
Retrospective appraisals and the use of data from the time period after the effective date are
addressed in STATEMENT ON APPRAISAL STANDARDS NO. 3 (SMT-3), Retrospective
Value Opinions. SMT-3 states, in part:
A retrospective appraisal is complicated by the fact that the appraiser already knows
what occurred in the market after the effective date of the appraisal. Data subsequent to
the effective date may be considered in developing a retrospective value as a
confirmation of trends that would reasonably be considered by a buyer or seller as of
that date. The appraiser should determine a logical cut-off because at some point distant
from the effective date, the subsequent data will not reflect the relevant market. This is a
difficult determination to make. Studying the market conditions as of the date of the
appraisal assists the appraiser in judging where he or she should make this cut-off. In the
absence of evidence in the market that data subsequent to the effective date were
consistent with and confirmed market expectations as of the effective date, the effective
date should be used as the cut-off date for data considered by the appraiser.
While the effective date is not an absolute cut-off point for market data, the appraiser must use
particular caution in applying it in these assignments.
Refer to SMT-3 for additional information.