An appraisal review report provides the client with the reviewer’s opinion of another appraiser’s work. For the reviewer’s opinion to be credible, it must meet certain appraisal industry standards.
Do review appraisers have to comply with any specified rules?
The Uniform Standards of Professional Appraisal Practice (“USPAP”) provide a set of rules for appraisers to comply with in order to develop and report credible assignment results in an appraisal review report. Appraisers who are accredited by the American Society of Appraisers (ASA) are required to comply with USPAP Standards 3 and 4 when performing an appraisal review. Regardless of what an appraiser names the appraisal review service, USPAP requires compliance to the Standards: “The use of other nomenclature for an appraisal or appraisal review assignment (e.g., analysis, counseling, evaluation, study, submission, or valuation) does not exempt an appraiser from adherence to the Uniform Standards of Professional Appraisal Practice.”
7 Key Components of an Appraisal Review report
USPAP states, “Appraisers have broad flexibility and significant responsibility in determining the appropriate scope of work for an appraisal or appraisal review assignment” (USPAP lines 351-352). While the review appraiser in entitled to broad flexibility in his/her scope of work for the review, the appraisal review report must meet certain minimum standards to be in compliance with USPAP. For example, the review report must be separate from the work under review; it cannot merely be an editor’s mark-up of a copy of the subject report.
USPAP Standards 3 and 4 provide the development and reporting requirements for appraisal reviews. In addition USPAP compliance, adherence to the ASA’s best practices is also required for ASA-accredited appraisers. Beyond typical assignment elements required in appraisals (i.e. state the client, intended users, report date, etc), the appraisal review report must include these components:
- Summary of the work under review’s assignment elements and scope of work
- Reviewer’s Scope of Work summary
- Reviewer’s analysis and conclusions
- Reviewers opinion of value (if applicable)
- Reviewer’s qualifications (an ASA requirement)
- Reviewer’s signed USPAP certification
- Work under review as an Addendum (an ASA requirement)
A review appraiser is required to develop an opinion as to whether the analyses in the work under review are appropriate, whether the reported opinions and conclusions are credible, and produce reasons for the reviewer’s disagreements with the work under review. The reviewer is also required to provide an overall determination of whether the report is appropriate and not misleading, and again, providing rationale for disagreements. In order to be USPAP-compliant, these evaluations of the analyses, opinions, conclusions, and reporting are to be communicated in the context of whether the work under review was complete, accurate, adequate, relevant, and reasonable.
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