USPAP question

[Jeff Horton]

OK, I have confussed myself. The more I think on this the more uncertain I am. I know we are required to have the following (or close) statement in an appraisal:

This is a 'Complete Appraisal' Assignment developed in compliance with USPAP Standards Rule 1. The report is a 'Summary Appraisal Report' as defined by USPAP Standards Rule 2-2(B).

Now what it the correct wording for a Limited Appraisal? For example a drive by where you don't do the cost approach and it is applicable? Would this be correct?

This is a 'Limited Appraisal' Assignment developed in compliance with USPAP Standards Rule 1. The report is a 'Summary Appraisal Report' as defined by USPAP Standards Rule 2-2(B).

Do we need to then list why it is a Limited Appraisal?

I have always done a cost approach and put it in the work file and noted that in the tranmittal letter. Now that I am finally recieved my license I am re-doign all my certifications and templates and want to get this one straighted out.

 

[George Hatch]

Jeff,

Your question, if I read it correctly, is that you want to know the proper verbiage to use in referencing USPAP to your work product.


You wrote:

"This is a 'Limited Appraisal' Assignment developed in compliance with USPAP Standards Rule 1. The report is a 'Summary Appraisal Report' as defined by USPAP Standards Rule 2-2(B).

So far, so good.....

And then you asked about further referencing to explain how you are able to justify not using an applicable approach to value.

What you're really asking about is how to properly disclose your scope of work decision and whether to invoke the Departure Rule.

You can invoke the Departure Rule to explain the ommission of the Cost Approach:

"This Limited Appraisal process is the result of Departure from SR 1-4(B), a Specific Requirement, because the Cost Approach was not deemed necessary by either the Client or the Appraiser within the context of the intended use and the intended user for this assignment. The omission of the Cost Approach does not unduly limit the credibility of this assignment."


You could also just write your scope of work to include the comment that in this case the client and the appraiser agreed that, although applicable, the Cost Approach was not considered necessary to produce a credible result within the context of the intended use.

Of course, there are other ways to word these paragraphs. I'm at home now and don't remember the exact verbiage I actually use in my reports. If you want, I can e-mail them to you on Monday.


You could (and probably should) do both. At this point, the ASB seems to feel that a properly written Scope of Work will eventually make the Departure Rule obsolete, if it isn't already. But for now, the Departure Rule is there and is useful as a disclosure device.

There will likely be opposing viewpoints on this one.

George Hatch

 

[Tom Hildebrandt]

George

Nice, succinct explanation. Any word yet on the test results for the national USPAP instructors course?

Jeff

The degree to which you explain why you departed and what the scope of your work product is will vary depending on the use for which the report is requested and the knowledge level of your client and any other intended users. The comments from George should serve as the minimum level of explanation, rather than as an absolute.


Regards

Tom Hildebrandt GAA

 

[Jeff Horton]

George, feel free to email me your comments. I never turn down a chance to see another appraisers way of doing things. I have learned a lot that way. Much of way I do things was gleaned from other appraisers.

Thanks for the input to both you and Tom. I have always just done what ever was needed, usually just the cost approach, and put in my work file and noted that fact to make my appraisals complete. I have decided to change some of my methods.

 

[Anonymous]

<< can invoke the Departure Rule >> rather you MUST invoke the Departure Rule or it is not a Limited Appraisal. If you omit an approach you must state why, and you must "state and explain" any permitted departures from...standard one." If you depart from Stds by not reporting the Cost approach you do not need to hold a cost approach in file." The report of a Limited appraisal must contain a prominent section that identifies the extent of the appraisal process performed and the departures taken. Clickforms has a checklist with available space for comment.

Ter Shields

 

[George Hatch]

Tom,

I'm still waiting. :roll: I think the instructors said it would take them a month to grade them and give out the letters. They don't do e-mails, don't do verbals over the phone and don't give a score other than pass or fail.


George Hatch