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Market Value Citation

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Doug Smith SRA

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Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
This is one of those second hand type questions.

A friend took the USPAP 7 hour course last week with the Farm Managers organization.

The presenter stated that appraisers should not cite USPAP as the source of the definition for market value. He wrote me asking for the "true" source of market value. He said that if an appraiser cited USPAP as to the source, their report would not pass review.

Anyone shed any light of this issue? I don't know why instructors stray from the script in these seven hour classes without being more clear.

I am guessing that the instructor is advising that the definition should fit the particular assignment or client group. and that the definition in USPAP is a general concept with the exception of the definition repeated in the FRT section and the definition published as part of Title XI (FIRREA). If the FIRREA definition is appropriate, it should be cited rather than where it is found in USPAP. (DUH!)

I have never seen an appraiser cite USPAP as a source so I don't know why the fuss or why the instructor would make such an issue of it.

What am I missing or is this more the case of my friend looking up from his Soduku and misinterpreting what was said in class?
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Doug,

The definition section of USPAP only defines what a market value is. It does not provide a specific "definition of market value" as a source to be cited in an appraisal.

See also Q&A #99 & #100.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
I use this:

Type and definition of value: Market Value as defined on page 13 of this appraisal report. The source for the definition of value was published by federal regulatory agencies pursuant to Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 between July 5, 1990 and August 24, 2990, by the Federal Reserve System (FRS), National Credit Union Administration (NCUA), Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the Office of Comptroller of the Currency (OCC). This definition is also referenced in regulations jointly published by the OCC, OTS, RFS, and FDIC on June 7th 1994, and in the interagency Appraisal and Evaluation Guidelines, dated October 27, 1994.


Unfortunately some appraisers don't take the time and just assume that it's in USPAP! It's not, there are many different definitions, this is the one I use most frequently.
 

frozone

Sophomore Member
Joined
Jul 20, 2006
Professional Status
Certified Residential Appraiser
State
New York
URAR Page 4. What more can be asked. I think it covers the topic pretty well.
 

alex gilbert

Member
Joined
Feb 21, 2003
Professional Status
Certified Residential Appraiser
State
California
I would agree with your friend’s instructor. USPAP is not a source for a definition of market value. While USPAP requires an appraiser to “state the type of value, and cite the source of its definition” it does not provide a definition. For most residential work we use the market value definition contained within the appraisal forms with Fannie Mae as the source. For other FRT work FIRREA (§ 323.2 Definitions (g))would be source of the definition. For other types of work it would be part of the engagement process for the client and appraiser to identify the type and definition of value being sought in the assignment.

I have, on more the occasion, reviewed reports that cited USPAP as the source of the market value definition. I have even seen internal bank policy and procedure manuals that cited USPAP as the source for the definition market value.
 

Hamlet

Elite Member
Joined
Aug 14, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
I agree USPAP only defines the general concept of Market Value. Market value has different definitions depending on the jurisdiction or client and has a direct impact on SOW. It is the appraiser’s responsibility to know which definition to use and to site its source.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
BTW, whats with the new USPAP with all the bells and whistles (or Q & A's) $130 and 3" thick?
 

Mary Tiernan

Senior Member
Joined
Dec 16, 2003
Professional Status
Retired Appraiser
State
Michigan
IN my last USPAP update course I learned to state see the definition of market value in the attached limiting conditions as provided by fannie mae - if you refer to the definition as provided on the forms.
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
I have never seen an appraiser cite USPAP as a source
I have seen it and done it myself. At one time USPAP included the FRT version of market value in the Definition section.

I would agree with your friend’s instructor. USPAP is not a source for a definition of market value. While USPAP requires an appraiser to “state the type of value, and cite the source of its definition” it does not provide a definition.
It most certainly does provide a definition. (I used to enjoy posting that it was in "my copy," but now that I am using the free on-line edition...).


Since an appraiser would be permitted to make up a definition, it would be error to criticize someone for using what is in USPAP; unless there was some specific law, regulation or assignment condition making some specific definition necessary. Even then, I tend to be sticler for the "substantial error" that has a "significant effect" on credibilty test.
 
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