A Really Scary Halloween Story
Does my report meet USPAP requirements and the ISA report writing standards? I copied the template in the Core Course manual.
One of the scariest creatures that I have ever met is the dreaded TEMPLATE MONSTER!! She sneaks into appraisers' templates, making little changes or gnawing at key words necessary for one appraisal and not another, ultimately making items from the ISA checklist disappear. She appears in an appraisal report in the form of unclosed parentheses (example below), or in useless paragraphs that have no particular relevance to the report at hand. Worst of all, she makes appraisers think that they do not need to use their brains! Oh my!! And, while the template monster can sometimes just take a nibble out of your report, sometimes she bites REALLY HARD and leaves big gashes in your USPAP compliance, appraisal methodology, or justified reasoning. OUCH!!
Even if you are using a template that meets USPAP and ISA report writing standards, you need to edit it for EVERY report EVERY time. Each appraisal report is unique, and no two reports should ever be exactly the same. Even with a really good template, you should know that every appraisal report you write will have different requirements. That is why there is a list of items on the ISA checklist that only apply "if applicable." USPAP clearly states that an appraiser must "perform the scope of work necessary to develop credible assignment results." The scope of work will differ for every appraisal report. Therefore, an appraiser needs to understand what they are doing and adjust any template accordingly. Borrowing a template will not guarantee that you are doing a report correctly. This is a common misconception. Instead, as one of my favorite high school teachers used to say, "You need to put on your thinking cap!" This is particularly true when writing your market analysis, choosing your effective date, listing the intended users of the report, etc.
And for goodness' sake, when copying the USPAP certification statement, PLEASE remove the parentheses. The appraiser needs to make a choice. The sample certification statement provided in Standard 8 of USPAP is an excellent place to start and ISA suggests that you copy it word for word into your templates. BUT THEN, you need to edit it. For example, USPAP Standards Rule 8-3 reads in part:
I have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest with respect to the parties involved.
I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.
You need to either take out the language in the parentheses or explain what your interest was. Did you previously appraise the items for an estate and now you are doing an insurance appraisal of certain items for one of the heirs? Did sell the item to your client two years ago and now you are doing an insurance appraisal? Is the client a friend? Have you discussed with the client the possibility of selling this item at your auction house? If so, then you need to disclose that information in your USPAP certification statement, and this is the perfect place to do it. Change that template!
So this Halloween, make every effort to bust those monsters and ghosts.
Helpful Hints for Avoiding the Template Monster:
- Create one good template for every intended use you regularly do. If you add a new intended use to your repertoire, then save a copy as a template.
- Highlight, italicize, or bold all parts of the template that should be revised for every appraisal. This includes your paragraph on market analysis. In fact, instead of having any language there you might just have a paragraph that reads "INSERT MARKET ANALYSIS."
- After you complete the appraisal report, make sure that you set it aside for a day or two (or at least overnight) and then give it a fresh read from start to finish before you send it out. It is horribly embarrassing (and scary) to send out a report where you fail to edit your template.
Now, go get that template monster!!
Happy Halloween from all of us at ISA!