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This article was published in the August/September 1999 issue of
AntiquePrime Magazine & Journal.
For What It's Worth ...
Q. Are there any standards to which appraisers can be held?
A. All appraisers, whether they appraise real estate, businesses,
or personal property, are governed by the Uniform Standards of Professional
Appraisal Practice (USPAP). In addition, each professional appraisal
organization has its own Code of Ethics and report writing standards.
I'll focus on USPAP, since that is common to all appraisers, regardless
of their affiliation with a professional appraisal organization.
USPAP has its roots in the real estate appraisal arena. Although
real estate appraisal organizations date back to the 1930s, in the
1980s several national real estate appraisal organizations joined
together to form the North American Council of Appraisal Organizations
(NACAO) to develop national standards and regulations. About the
same time, the Savings & Loan industry came under scrutiny by
the U.S. Congress for its use of faulty and/or fraudulent real estate
appraisals and the resulting financial lending crisis. This led
to the funding of The Appraisal Foundation (TAF) by the members
of NACAO in 1987. Two years later, TAF approved and adopted USPAP.
I hope you can tolerate just a little more history and a few more
acronyms. In 1989 the Financial Institutions Reform, Recovery and
Enforcement Act (FIRREA) was passed in the wake of the S&L crisis.
Title XI of this act deals with requirements for licensing, certification,
and professional conduct of real estate appraisers, and officially
recognized TAF and USPAP as the standards for real estate appraisal
activity.
What does this have to do with personal property appraising? Over
the last ten years, USPAP has been expanded to include business
valuators and personal property appraisers. TAF's Board of Trustees
appoints members to two independent operating boards: the Appraiser
Qualification Board (AQB) and the Appraisal Standards Board (ASB).
The AQB last year adopted voluntary minimum qualification criteria
for personal property appraisers. There is no regulatory compliance
mandated, unlike real estate appraisers. The ASB's primary task
is the establishment, promulgation, dissemination and interpretation
of USPAP, but the ASB does not enforce USPAP.
So what is USPAP? It's ten Standards Rules dealing with the process
of developing and reporting an appraisal. Only two rules apply to
personal property: Standards Rule 7, Personal Property Appraisal
Development, and Standards Rule 8, Personal Property Appraisal Reporting.
The remaining standards cover real property, ad valorem taxation
appraisals (mass appraisals), and business appraisals. In addition
to the Standards, USPAP is comprised of Comments, Statements, and
Advisory Opinions. USPAP is important not only to appraisers, but
to those who hire us to do appraisal and consulting work. For more
information on this very important topic, visit the TAF web site,
www.appraisalfoundation.org.
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