Appraisal Foundation USPAP Advisory Opinion 21 Exposure Draft

With USPAP standards 4 and 5 being discontinued (Real Property Appraisal Consulting Development and Reporting), the Appraisal Standards Board (ASB) has released an exposure draft updating Advisory Opinion 21 for clarifications due to the changes.  AO 21 is an important component in understand appraising, appraisal practice and valuation services for all appraisers.

It would be well worth all personal property appraisers time to refresh their understanding of AO-21 and read the proposed version.

The ASB reports

Individuals perform numerous roles within the broad realm of valuation services. Examples include appraisal, brokerage, auctioning, property management, advocate consulting (whether performed as an advocate or not), appraisal review, consulting and collecting market data. Some valuation services are part of appraisal practice and require compliance with USPAP. What are the USPAP compliance requirements for these various services? More specifically:

1. When should an individual comply with USPAP?
2. What is the relationship between Valuation Services and Appraisal Practice?
3. What does acting “as an appraiser” or performing a service “as an appraiser” mean?
4. Why does an expectation for an individual to act as an appraiser indicate an obligation to comply with USPAP?
5. What are the responsibilities of an appraiser regarding intended user expectations?
6. What are the USPAP obligations for appraisal practice outside of appraisal, and appraisal review, and appraisal consulting?
7. What are the USPAP obligations for valuation services outside of appraisal practice?

Jump to question 2 (ed)
What is the relationship between Valuation Services and Appraisal Practice?
A key to distinguishing an appraiser’s obligations is understanding the relationship between “valuation services” and “appraisal practice” in USPAP. Appraisal practice is a subset of 39 valuation services.

“Valuation services” are services pertaining to aspects of property value. Appraisers and others for whom value is an issue provide valuation services. Examples include appraisal, brokerage, auctioning, property management, consulting, appraisal review consulting and collecting market data.

“Appraisal practice” is defined as valuation services performed by an individual acting as an appraiser. Only appraisers may offer services that are considered appraisal practice. Examples include appraisal, appraisal consulting, appraisal review and collecting market data (acting as an appraiser).

Since USPAP obligations apply to those who are acting as appraisers, USPAP applies to appraisal practice.

Click HERE to download the full Advisory Opinion 21.