Excerpt: Journal of Advanced Appraisal Studies - 2011

USPAP certified instructor William Novotny writes an in-depth article on competency disclosures for personal property appraisers.  Within the article, Bill touches on competency requirements mandated by USPAP such as the Competency Rule, how competency impacts scope of work, review of several advisory opinions which are related to competency, dealing with a lack of competency, significant appraisal assistance and several examples.  Given that competency is a very important aspect of appraising, and impacts how the report should be developed and items disclosed all appraisers, especially generalist should be very familiar with the USPAP rule.

The Journal is published by the Foundation for Appraisal Education, and proceeds support the educational initiatives and scholarships of the foundation.

Bill Novotny writes in his article When Does USPAP Require a Competency Disclosure?

Sometimes, despite having limited knowledge and experience regarding an unusual property type, I feel competent to perform the assignment because I have performed similar appraisals in the past. And, as in the past, I also expect to find good data, though that is not always the case. Still, I feel competent to undertake the assignment although I also realize that I might need some assistance.

So, when encountering an unusual property type, I often state to the client something to the effect of, “I am a generalist appraiser. I am not an expert in "x". I may need to consult with an expert for this "x".” This statement is not necessarily a competency disclosure. It depends on “Which Rule Rules?” Appraisers must decide when and if they are required to make a disclosure to the client that they are not competent to perform the assign-ment. But then again, such a statement could be merely a communication with the client regarding the anticipated scope of work that the appraiser feels must be undertaken.

If the appraiser made a disclosure because he or she lacks the know-ledge and experience to perform the assignment, then a competency disclo-sure would be required as explained below. It is the burden of each appraiser to determine in each assignment whether or not he or she is competent to perform an assignment or a component of an assignment.

If the appraiser communicates that he or she may need to consult with an expert (but still feels competent to perform the assignment in regard to that property), then there is no USPAP requirement to make a competen-cy disclosure. If such is the case, then the above statement would simply represent good client communication, i.e., it would help ensure that the client understands that the scope of work might have to be expanded and, if so, that the client might incur additional costs. With such information, the client may choose to withdraw the property from the assignment and have it appraised by a specialist, or instruct the appraiser to pass on the valuation of such a property when confronting a competency concern.

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