What does Uspap say about market value? Market Value is described in the Uniform Standards of Professional Appraisal Practices (USPAP) as “a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership, or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the …
What is USPAP and how does USPAP impact the appraisal process?
USPAP contains standards for all types of appraisal services including real property, personal property, business valuation and mass appraisal. The purpose of USPAP is
to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers
.
Why is it important to understand how the USPAP works?
It’s
proof of value for financing or to support an insurance claim
. It can also help keep your accounting records accurate and give you a competitive edge in your industry. A non-compliant appraisal will likely get rejected, ignored, or simply be considered as insufficient.
Do FHA appraisers know the selling price?
Therefore,
the appraiser will most likely know the selling price of a home but this is not always the case
. There are times that we have appraised properties for private sales where both the buyer and seller have declined to provide this information.
Does USPAP require cost approach?
The reporting requirement of USPAP known as the departure rule does not apply because
the appraiser must always use the cost approach to value when considered applicable
.
Fannie Mae does not require the cost approach to value except for the valuation of manufactured homes
. However, USPAP requires the appraiser to develop and report the result of any approach to value that is necessary for credible assignment results.
Who retains final authority over revisions to USPAP? The guidance issued by the APB is binding on
real property appraisers
. This advisory council is responsible for providing global and international information and support to the Appraisal Foundation.
USPAP was adopted by Congress in 1989, and
contains standards for all types of appraisal services, including real estate, personal property, business and mass appraisal
. Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions.
The comment on Standards Rule 3-3(a) states that “… the reviewer is required to develop an opinion as to the completeness, accuracy, adequacy, relevance, and reasonableness of the analysis in the work under review, given law, regulations, or intended user requirements applicable to the work under review.”
Advisory Opinions are issued
to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems
.
Standard 9 of USPAP requires an appraiser, valuing a business or other intangible assets, to begin by identifying the problem and the scope of work to be performed. Rule 9-1 also includes a requirement that
the appraiser should be aware of and correctly employ accepted appraisal methods
.
Let’s be clear:
a Zillow estimate is not an appraisal
. It’s a computer-generated estimate based on the available data. While many home buyers will consider Zestimate when looking for a home, they should also factor in a professional real estate estimate.
Lenders want to ensure the homes they’re financing are worth the prices being paid, which is the major reason for property appraisals. Though
there’s no law against paying more than a property’s appraised value
, mortgage lenders almost never loan more than that value.
The cost approach determines value by
adding the value of the land to the cost of a new equivalent building, then subtracting out any depreciation
. We walked through how appraisers calculate cost new, depreciation, and also how land value is determined.
Market value is the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the
price is not affected by undue stimulus
. 1.
When to Use the Cost Approach. The ideal stage to utilize the cost approach is
when constructing or proposing a new property
. Given that construction expenses associated with erecting a new building should be readily available to the appraiser, these costs are often the best indicator to determine a property’s value.
In general terms the USPAP definition is elegant in its simplicity. We all understand what it is that appraisers provide.
You provide opinions of value
. Call it whatever you want, but an opinion of value is an appraisal.
There are five basic rules located in the Preamble section of USPAP. These include the
Ethics Rule, Record Keeping Rule, Competency Rule, Scope of Work Rule and Jurisdictional Exception Rule
. The Ethics Rule is to promote and preserve the public trust.
USPAP contains standards for all types of appraisal services including real property, personal property, business valuation and mass appraisal. The purpose of USPAP is
to promote and maintain a high level of public trust in appraisal practice by establishing requirements for appraisers
.
- direct comparison approach.
- income approach.
- cost approach.
