BASIC APPRAISAL PRINCIPLES | CHAPTER 1

Chapter 1

Define Appraiser ( C I I O)

One who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective.

An appraiser must be an independent observer and reporter of market facts. Appraisers do not create or influence value; we just develop and report opinions of value that are based on our analysis of market forces.

Impartial generally means a mental state that does not favor one side over another.

An appraiser must be objective; he or she is not permitted to be an advocate for one party or another. We have to avoid favoritism and bias when providing appraisal services.  

Many appraisal situations involve competing interests. We may be retained by a husband or a wife in a divorce to value the marital property assets. One spouse wants the appraisal to be as high as possible and the other wants it as low as possible.  Our job is to provide an objective and unbiased opinion of value, regardless of the client's interests.

What does USPAP stand for?

Uniform Standards of Professional Appraisal Practice

What other situations may involve two differing interests? Name at least four.

Adversarial situations

• Ad valorem assessment appeals

• Relocation appraisals

• Appraisals for casualty losses (fires, floods, etc.)

• Purchase offers (working for the buyer or seller)

• Partnership breakups

• Division of business assets

• Negotiation of leases (landlord vs. tenant)

• Condemnation appraisals (homeowner vs condemning authority)

• Estate settlements (property recipient vs. IRS)

A report is defined in USPAP as:

any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client or a party authorized by the client upon completion of an assignment.

Most residential appraisal reports are completed using standardized appraisal report forms that are jointly approved by Fannie Mae and Freddie Mac.

pre-printed report form; these types of reports are commonly (but not exclusively) used in appraisals of residential properties intended for use in mortgage lending.  There are also report forms that can be used to report the results of an appraisal of a non-residential property.

A narrative report is defined in The Dictionary of Real Estate Appraisal, Seventh Edition, as:

A written communication of the results of a valuation or review assignment presented to the client in narrative style rather than on a form or orally.

Most reports for commercial, industrial or income-producing properties are written in "longhand" fashion in what are referred to as narrative appraisal reports. The appraiser starts with a clean slate and write out the report, like doing a research paper or report for school.

What does AQB stand for? and what is its role in appraisals?

Appraiser Qualifications Board (is part of The Appraisal Foundation (TAF), a private, non-profit educational foundation.)

• responsible for establishing criteria for the certification and licensing of appraisers and ensuring that appraisers meet the required education and experience standards.

• establishes requirements for qualifying education courses that applicants take in order to become appraisers.

What does TAF stand for?

The Appraisal Foundation (TAF), a private, non-profit educational foundation

Define Criteria.

Qualifications that all the states must meet in licensing, certification and re-certification of appraisers

• not all states adopted all of the 2018 revisions to the Criteria.  Some states adopted only parts of the 2018 Criteria.

• periodically revised by the AQB as necessary