IVS (International Valuation Standard) vs USPAP

[RCA]

You can't cross a user's (legitimate) expectations without also crossing USPAP at the same time. Unless it's an unreasonable expectation, user expectations are otherwise always part of the assignment.

A common expectation is a higher value than what the appraiser judges appropriate based on the evidence. Another common expectation is that certain negative characteristics shouldn't be mentioned in the report. Another is that you have ignored or dismissed an important feature. - Need I go on? This is total BS as you state it. But, I also have used the term "expectations" in such a loose manner. What we mean are "allowable" expectations.
That is, what you CAN state is something about the user's expectations with respect to certain qualities of an appraisal and not with respect to certain other qualities. You condition those expectations into an allowable category, a category that is flatly disallowed and a grey area THAT IS AT THE DISCRETION OF THE APPRAISER.

This is just common sense.

 

[George Hatch]

That which is not prohibited is generally allowed.

No matter which appraisal code of conduct we're talking certain elements will always be prohibited when someone is engaged in appraisal practice

client advocacy
biased results
lying cheating or stealing in an appraisal
criminal conduct
gross negligence
misleading reports
incompetent performance

So any client request that includes any of the above will be prohibited regardless of which code or standard we're talking about. Some of the housekeeping items will vary like (in USPAP) the additional requirements for records retention or prior services disclosures or whatnot, but in terms of the basics of development and reporting there will be a lot of overlap.

As for either prohibiting or requiring "a grey area THAT IS AT THE DISCRETION OF THE APPRAISER" to which you refer, perhaps you can provide an example of what you're talking about that isn't already addressed in USPAP as it stands.

 

[RCA]

Here is a comparison of the length of IVSC to USPAP in Pages, Words, Characters, Paragraphs, Lines

That which is not prohibited is generally allowed.

No matter which appraisal code of conduct we're talking certain elements will always be prohibited when someone is engaged in appraisal practice

client advocacy
biased results
lying cheating or stealing in an appraisal
criminal conduct
gross negligence
misleading reports
incompetent performance

So any client request that includes any of the above will be prohibited regardless of which code or standard we're talking about. Some of the housekeeping items will vary like (in USPAP) the additional requirements for records retention or prior services disclosures or whatnot, but in terms of the basics of development and reporting there will be a lot of overlap.

As for either prohibiting or requiring "a grey area THAT IS AT THE DISCRETION OF THE APPRAISER" to which you refer, perhaps you can provide an example of what you're talking about that isn't already addressed in USPAP as it stands.

To repeat again, this goes back to what I said about being able to extract a part of the standard and use it in isolation to support unacceptable behavior. I don't see this (so far) in IVSC. IVSC doesn't make many of the mistakes that USPAP makes in technical issues related to using the standard.

[Note: A detailed comparison of IVS to USPAP shows that USPAP is 2.97 times longer (189,830 words vs 63,860 words for IVS), while IVS nonetheless deals with many things in more detail, such as defining 6 bases of value. The people that wrote it have a good technical understanding of appraisal and finance and are schooled in logic (in particular I see the influence of Material Logic (aka Aristotle's "Posterior Analytics "). The only good thing about USPAP is that, in order, (1) The punctuation is superior and (2) the spelling somewhat better, according to MS Word; but that is likely due to the influence of English spelling and contributions by foreigners for whom English is only a second or third language. The bad punctuation you also see in a lot of technical writing here in the US, especially in Biotech.]

A previous example I have used on this forum in discussions was the fact that the Acceptability Comment in the SOW Rule of USPAP states, as an entire statement that can be extracted and used in isolation to prove whether something conforms to SOW, that conformance to USPAP is NOT required for acceptability:



This creates a contradiction in statements. IVS has (a)- parts to the SOW requirements and that last one states that the SOW must comply with IVS. And, please don't repeat the nonsense about peers, - at term which doesn't exist in IVS.

IF your first statement above was correct, then we would only need statements of prohibition in a standard. That would be a pretty contorted standard that doesn't make any sense. A standard is a Social Contract, a formal agreement to do things a certain way, -- WITH many conditions.

Microsoft Word Analytical Comparison of IVS and USPAP, Metrics and Grammar​

Metric	IVSC (2020)	IVSC Ethics	IVSC Review	IVSC Total	USPAP	RATIO USPAP/IVSC
Pages	141	15	33	189	402	2.13​
Words	50,409	4,370	9,081	63,860	189,830	2.97​
Characters	273,756	25,058	49,437	348,251	942,777	2.71​
Paragraphs	2,731	165	334	3,230	9,579	2.97​
Lines	8,863	520	1,273	10,656	16,453	1.54​
Average Word Length	5.4306969​	5.73409611​	5.44400396​	5.45335108​	4.96642786​
Average Paragraph Length	18.458074​	26.4848485​	27.1886228​	19.7708978​	19.8173087​
Tot Errors/Suggestions	1,127	111	263​	1,501	3,817	2.54​
Spelling	242	32	14​	288	425	1.48​
Grammar	227	26	218​	471	1,211	2.57​
Clarity	381	34	16​	431	1,213	2.81​
Conciseness	135	10	4​	149	371	2.49​
Formality	2	ok	ok	2	24	12.00​
Punctuation	50	1	6​	57	38	0.67​
Resume	67	7	2​	76	387	5.09​
Vocabulary	23	1	3​	27	148	5.48​

By the way, the TAF and IVSC have a document on writing appraisal reports to comply with both the IVS and USPAP. IVS preempts USPAP in most cases, as far as I see, because it is more strict. For example, although I put my Limiting Conditions in the Engagement Agreement, most US appraisers don't do that. That would be required by IVS.

https://www.ivsc.org/files/file/view/id/1051

Also, as you might expect, local laws and regulations preempt anything else in IVS as "departures", but apparently we don't have to worry about a conflict between USPAP and IVS - as long as we use the IVS terms instead of the USPAP terms (IVS requires the use of their terms, whereas USPAP does not. .... Thus "Special Assumption" rather than "Hypothetical Condition", although why not use both?)

 

[andrew81]

Bert, in all seriousness, not trying to be rude or put you down. Have you read A Bridge From USPAP To IVS 2018?
https://appraisalfoundation.sharefile.com/share/view/s1463ebad4f94ee9a

Seems you are begging an excuse to defend your love affair with USPAP.

Before reading A Bridge From USPAP To IVS 2018, I didn't know anything about IVS. Not because I have a love affair with USPAP, but because, as a certified appraiser in the state of Illinois, I am required by law to follow USPAP. For me, it is about acting as a professional and upholding the values that I certify to follow.

Now after reading, A Bridge From USPAP To IVS 2018, I know that The Appraisal Foundation and the International Valuation Standards Council have been collaborating in the development of standards for years. Both standards are remarkably similar, both address the development of a valuation opinion based on an appropriate scope of work, both address report content and file documentation, and both address the competency and independence of the appraiser. The two standards are more similar than different.

edit//

i see you linked to it in the last post. so you have read it.

 

[RCA]

Bert, in all seriousness, not trying to be rude or put you down. Have you read A Bridge From USPAP To IVS 2018?
https://appraisalfoundation.sharefile.com/share/view/s1463ebad4f94ee9a


Before reading A Bridge From USPAP To IVS 2018, I didn't know anything about IVS. Not because I have a love affair with USPAP, but because, as a certified appraiser in the state of Illinois, I am required by law to follow USPAP. For me, it is about acting as a professional and upholding the values that I certify to follow.

Now after reading, A Bridge From USPAP To IVS 2018, I know that The Appraisal Foundation and the International Valuation Standards Council have been collaborating in the development of standards for years. Both standards are remarkably similar, both address the development of a valuation opinion based on an appropriate scope of work, both address report content and file documentation, and both address the competency and independence of the appraiser. The two standards are more similar than different.

edit//

i see you linked to it in the last post. so you have read it.

As I have already stated in other posts, the IVS is a much better standard. You need to understand a number of things to see the differences, which are often subtle, but nonetheless important.

1. One of the aspects of Material Logic, is the division of concepts into discrete subconcepts which can be dealt with individually; for example, the division of value bases in IVS.

2. You won't find anything in USPAP like this (excuse the English spelling of judgment and minimize):

IVS (2020 version) 40.1. "The process of valuation requires the valuer to make impartial judgements as to the reliability of inputs and assumptions. For a valuation to be credible, it is important that those judgements are made in a way that promotes transparency and minimises the influence of any subjective factors on the process. Judgement used in a valuation must be applied objectively to avoid biased analyses, opinions and conclusions."

I noticed this because of my own "Subjective Value Containment Approach"!! For many years, residential appraisers go crazy with their often wild adjustments for view, aesthetics, quality and condition.

Enough.

 

[bnmappraisal]

An appraiser is to be unbiased, objective and independent ... it's summed up in a pretty quick sentence

 

[Terrel L. Shields]

Flacco, I'd still counter that the "guidelines" that are set forth, many RES (I used to be one of them) appraisers interpreted them as "gospel" or "USPAP"

Thus Fannie Mae has appraisal standards.

Formerly we had a section called "supplemental Standards" as I recall. Replaced by SOW. So...I think semantics leads me to suggest that the "rules" "guidelines" " SOW" or whatever the **** you want to call it that come of Fannie Mae, Freddy Mac, VA, FHA, FmHA, the Jolly Green Giant, or any other Tom Dick and Harry are, in fact, "incorporated by reference" within USPAP, therefore they are USPAP and if you violate those "guidelines" you have violated USPAP...so yes, guidelines are USPAP. You can call 'em biscuits but the kittens in that oven are really still just cats.

 

[Carolina1]

Persons serving the IVSC have privately bemoaned the lack of specificity and detail in IVS. But, there doesn't seem to be a realistic solution since IVS faces the complexities of a global audience. Writing multi-discipline valuation standards for adoption by a global audience generally limits the content to high-level concepts, ideals, and principles that are structured to avoid conflict with territorial peculiarities. Unfortunately, standards having substantial and frequent ambiguity can be challenging to enforce at a regulator level (assuming a regulator exists), a judicial level, and a tort level. From a client standpoint, ambiguous standards provide little practical benefit since the presence of significant "wiggle room" and individual interpretation begets a lack of uniformity. With that said, IVS is readily accepted by developed and developing countries, organizations, and companies since its high level structure is easy to agree on - similar to the ease of obtaining consensus that people shouldn't steal from each other.

At the end of the day, I'm glad we have IVS because it provides an umbrella standard that is particularly useful in countries where there is no local valuation standard, or in assignments that have multi-national scope. But, I do not categorically accept IVS as a replacement for, or superior to, territorial standards like USPAP.

USPAP may have shortcomings and areas for improvement, but its long and largely successful history in courts, regulator actions, and appraiser defense suggests the standards are tested and mature. Additionally, I find the AOs and FAQs to be largely useful and practical.

Although I'm generally bullish on USPAP, I concur with those who believe that USPAP update classes could be shorter and more effective. Also, I believe that all USPAP update classes should include a mandatory test, with a passing grade required for credit. And, there is merit to the argument that the USPAP update cycle should be lengthened.

Just my 2 cents.

 

[George Hatch]

One reason USPAP is written this way is to reduce the amount of wiggle room that people employ to try to get around the fundamentals. The ASB constantly trying to get it to the point where it can only be read and understood one way. Those edits aren't "changes" to the content and intent of USPAP, they're clarifications of what they had intended all along.

For example, they had to break down and spend time/energy to define "personal inspection" because of how common it became for people to argue that inspection by pics or video amounted to a personal inspection.

 

[RCA]

Persons serving the IVSC have privately bemoaned the lack of specificity and detail in IVS. But, there doesn't seem to be a realistic solution since IVS faces the complexities of a global audience. Writing multi-discipline valuation standards for adoption by a global audience generally limits the content to high-level concepts, ideals, and principles that are structured to avoid conflict with territorial peculiarities. Unfortunately, standards having substantial and frequent ambiguity can be challenging to enforce at a regulator level (assuming a regulator exists), a judicial level, and a tort level. From a client standpoint, ambiguous standards provide little practical benefit since the presence of significant "wiggle room" and individual interpretation begets a lack of uniformity. With that said, IVS is readily accepted by developed and developing countries, organizations, and companies since its high level structure is easy to agree on - similar to the ease of obtaining consensus that people shouldn't steal from each other.

At the end of the day, I'm glad we have IVS because it provides an umbrella standard that is particularly useful in countries where there is no local valuation standard, or in assignments that have multi-national scope. But, I do not categorically accept IVS as a replacement for, or superior to, territorial standards like USPAP.

USPAP may have shortcomings and areas for improvement, but its long and largely successful history in courts, regulator actions, and appraiser defense suggests the standards are tested and mature. Additionally, I find the AOs and FAQs to be largely useful and practical.

Although I'm generally bullish on USPAP, I concur with those who believe that USPAP update classes could be shorter and more effective. Also, I believe that all USPAP update classes should include a mandatory test, with a passing grade required for credit. And, there is merit to the argument that the USPAP update cycle should be lengthened.

Just my 2 cents.

My thinking is kind of the same. I would prefer "operational definitions" that are so detailed that if different appraisers are given the same appraisal task, we could almost guarantee they would produce about the same opinion of value. As IVS stands, it provides a common or general standard that is fairly high level. As such, it refers to operations only in a general sense. It cannot be expected to give an operational definition of Market Value that is going to be useable.

However, you could do what they do in IT, computers, communications - just allow the proliferation of specific standards, hierarchically under the higher-level standard. So, we could have a standard for appraising residential property using MARS and the Subjective Value Containment Approach that is so specific, you would get very similar value conclusions from experienced appraisers knowledgeable in the techniques defined by the standard. And to this end, the structure of IVS allows more specific standards to be appended under the section "Asset Standards". That is to say, it has separated "General Standards" from "Asset Standards". USPAP has it all messed up. We cannot easily extend USPAP to do what needs to be done.

In reality, when we look at how experienced (very experienced) commercial appraisers work in large established appraisal companies, we see that they develop over years a set of operations they go through for certain kinds of appraisals that are so explicitly defined, that I would have to say they perhaps lose sight of the end result. Or put it this way, they often cannot explain the why and wherefore of the individual steps they execute almost out of habit, other than to wind up saying something to the effect that "that is really what the customer expects", - the customer being some gigantic REIT or insurance company that channels A LOT of work their way. But, nonetheless, the way it should be is that someone engineers a set of operations that will do a good job of producing the type of value for a certain kind of task, and then sets that as a standard, giving it a name and maybe even some kind of Standard number, such as Standard 803.4.15. Maybe the operations involve the creation of dozens of Argus and Excel spreadsheets, ensure that certain key intermediate values are in synch and sum all together in a cohesive summary worksheet, which likely takes our very experienced commercial appraiser into the wee hours of the night for a couple of weeks, 60+ hours per week, to complete.