USPAP Standard Rule 1-2

Standards Rule 1-2

In developing a real property appraisal, an appraiser must:

(a)

identify the client and other intended users; 5

(b)

identify the intended use of the appraisers opinions and conclusions; 6

Comment: An appraiser must not allow the intended use of an assignment or a clients objectives to cause the assignment results to be biased. 7

(c)

identify the type and definition of value and, if the value opinion to be developed is market value, ascertain whether the value is to be the most probable price:

(i)

in terms of cash; or

(ii)

in terms of financial arrangements equivalent to cash; or

(iii)

in other precisely defined terms; and

(iv)

if the opinion of value is to be based on non-market financing or financing with unusual conditions or incentives, the terms of such financing must be clearly identified and the appraisers opinion of their contributions to or negative influence on value must be developed by analysis of relevant market data;

Comment: When developing an opinion of market value, the appraiser must also develop an opinion of reasonable exposure time linked to the value opinion. 8

(d)

identify the effective date of the appraisers opinions and conclusions 9

(e)

identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, 10 including:

(i)

its location and physical, legal, and economic attributes;

(ii)

the real property interest to be valued;

(iii)

any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal;

(iv)

any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and

(v)

whether the subject property is a fractional interest, physical segment, or partial holding;

Comment on (i)(v): The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.

An appraiser may use any combination of a property inspection and documents, such as a physical legal description, address, map reference, copy of a survey or map, property sketch, or photographs, to identify the relevant characteristics of the subject property.

When appraising proposed improvements, an appraiser must examine and have available for future examination, plans, specifications, or other documentation sufficient to identify the extent and character of the proposed improvements. 11

Identification of the real property interest appraised can be based on a review of copies or summaries of title descriptions or other documents that set forth any known encumbrances.

An appraiser is not required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.

(f)

Identify any extraordinary assumptions necessary in the assignment;

Comment: An extraordinary assumption may be used in an assignment only if:

  • it is required to properly develop credible opinions and conclusions;

  • the appraiser has a reasonable basis for the extraordinary assumption;

  • use of the extraordinary assumption results in a credible analysis; and

  • the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions.

(g)

identify any hypothetical conditions necessary in the assignment.

Comment: A hypothetical condition may be used in an assignment only if:

  • use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable analysis, or for purposes of comparison;

  • use of the hypothetical condition results in a credible analysis; and

  • the appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions.

(h)

determine the scope of work necessary to produce credible assignment results in accordance with the SCOPE OF WORK RULE. 12

Original content was published in The Appraisal Foundation site.

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Contact C.R.E.A.

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

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STANDARD 1: REAL PROPERTY APPRAISAL, DEVELOPMENT

 

STANDARD 1: REAL PROPERTY APPRAISAL, DEVELOPMENT

In developing a real property appraisal, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses necessary to produce a credible appraisal.

Comment: STANDARD 1 is directed toward the substantive aspects of developing a credible appraisal of real property. The requirements set forth in STANDARD 1 follow the appraisal development process in the order of topics addressed and can be used by appraisers and the users of appraisal services as a convenient checklist.

Original content was published in The Appraisal Foundation site.

—-

Contact C.R.E.A.

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+