UPDATES FOR YOUR APPRAISAL PRACTICE
Happy New Year one and all - Updates for your appraisal practice.
There are a few changes to the new 2024 edition of the Uniform Standards of Professional Appraisal Practice (USPAP), effective January 1, 2024.
It is your responsibility as an ISA Appraiser to educate yourself in the changes to USPAP. ISA is offering many 7 hour USPAP courses in the coming months as well as the 15 hour USPAP course as required for membership.
As appraisers, we must promote and preserve the public trust inherent in appraisal practice by observing the highest standards of professional ethics. The Appraisal Standards Board (ASB) adopted a nondiscrimination section to the ETHICS RULE in the 2024 USPAP that focuses on core concepts from key antidiscrimination laws. It explicitly requires that appraisers be knowledgeable about and follow antidiscrimination laws that apply to the appraiser or the assignment.
Some of the most visible changes involved definitions. This information is being supplied to you as a member of ISA, however, this information does not replace the need to attend the 7 hour USPAP update on the required two year calendar schedule.
Definition of Assignment Elements
The Board retired the definition of ASSIGNMENT ELEMENTS. The definition included a list of the assignment elements, as stated in the Problem Identification section of the SCOPE OF WORK RULE, which were applicable in every appraisal assignment. However, in a few circumstances, the assignment elements listed in the definition may not be the exact ones that would be applicable in some appraisal review assignments.
Definition of Misleading
The definition of MISLEADING has been retired. Under the definition, there was some confusion as to if even a very small error (such as insignificant typo) in an appraisal report or appraisal review report met the USPAP definition of misleading. The definition of the word “misleading” then will now revert to its common dictionary definition and will no longer have a definition specific to USPAP.
Definition of Relevant Characteristics
The Board retired the definition of RELEVANT CHARACTERISTICS. The retirement of this definitions will avoid drawing a distinction between the phrase “relevant characteristics” and the following similar phrases: a. “property characteristics relevant to the assignment” and b. “characteristics of the property that are relevant to the type and definition value.” These two phrases have identical meanings as “relevant characteristics.” Defining one term, but not the others, implied there is a difference requiring a distinction when no difference existed.
APPRAISER: one who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective. Comment: Such expectation occurs when individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.
PERSONAL INSPECTION: (for an appraisal assignment) the appraiser's in-person observation of the subject property performed as part of the scope of work; (for an appraisal review assignment) the reviewer’s in-person observation of the subject of the work under review, performed as part of the scope of work.
Comment: An appraiser’s personal inspection is typically limited to those things readily observable without the use of special testing or equipment. Appraisals of some types of property, such as gems and jewelry, may require the use of specialized equipment. A personal inspection by an appraiser is not the equivalent of an inspection by an inspection professional (e.g., a structural engineer, home inspector, or art conservator).
The new definition of Personal Inspection clarifies the distinction between an appraiser’s inspection that is part of the scope of work for the assignment and an inspection that is completed by a third party outside of the appraiser’s scope of work. Advisory Opinion 2 has been revised to better-illustrate the applicability of this revised definition and includes guidance regarding an appraiser’s disclosure obligations related to a personal inspection.
WORKFILE: data, information, and documentation necessary to support an appraiser’s analyses, opinions, and conclusions (To reflect what the ASB intends for the workfile to contain, and not restrict it to just materials specifically intended to show compliance with USPAP, the ASB adopted the changes to the definition)
We strongly encourage all our members to visit https://appraisalfoundation.org/imis/TAF/USPAP.aspx for detailed Summary of Actions as implemented by the Standards Board of the Appraisal Foundation.
Please visit the ISA website for the upcoming offerings of USPAP for your scheduling needs. Also please plan to attend the Directors Office Hour on January 16, 2024 2PM CST for further discussion on USPAP updates, IRS updates and other news important to our profession.
Judith Martin ISA CAPP, Education Director ISA