Uniform Standards of Professional Appraisal Practice
Encyclopedia
Uniform Standards of Professional Appraisal Practice, commonly referred to by the acronym USPAP, can be considered the quality control standards applicable for real property, personal property, intangibles, and business valuation appraisal analysis and reports in the United States
and its territories. USPAP, as it is commonly known, was first developed in the 1980s by a joint committee representing the major U.S. and Canadian appraisal organizations. As a result of the savings and loan crisis
, the Appraisal Foundation
(TAF) was formed by these same groups, along with support and input from major industry and educational groups, and TAF took over administration of USPAP.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
(FIRREA) authorized the Appraisal Subcommittee (ASC), which is made up of representatives of the leading U.S. government agencies and non-governmental organizations empowered to oversee the U.S. mortgage and banking system. The ASC provides oversight to TAF.
TAF carries out its work through two divisions – the Appraisal Standards Board
(ASB) and the Appraisal Qualifications Board (AQB). The latter group sets forth minimum qualifications for appraisal licensure, and its work has been adopted by all states and territories. The ASB maintains USPAP, and issues updates in January of even numbered years.
All US states and territories require appraisal licensure for valuation work performed for Federally regulated institutions; however, 35 states and territories of the US require appraisal licensure for all valuation work performed, whether Federally regulated or for other use.
Since 2006, USPAP has been updated in a 2 year cycle, which begins on January 1 of even number years. The current version of USPAP is available at www.appraisalfoundation.org and has an effective date of January 1, 2010.
USPAP represents the generally accepted and recognized standards of appraisal practice. At its organizational meeting held on January 30, 1989, the Appraisal Standard Board (ASB) unanimously approved and adopted the original USPAP as the initial appraisal standards promulgated by ASB. USPAP may be amended, Interpreted, or retired by ASB after exposure to the users of appraisal services and the public in accordance with established rules of procedure.
Over the years, the USPAP document has evolved in content and organisational structure in response to changes in appraisal practice. The ASB has developed a process for developing both standards and guidance based, in part, on written comments submitted in response to exposure drafts and oral testimony.
in the U.S., it does not attempt to prescribe specific methods to be used. Rather, USPAP simply requires that appraisers be familiar with and correctly utilize those methods which would be acceptable to other appraisers familiar with the assignment at hand and acceptable to the intended users of the appraisal. USPAP directs this through what is called the Scope of Work rule. At the onset of an assignment, an appraiser is obligated to gather certain specified preliminary data about the project, such as the nature of the property to be appraised, the basis of value (e.g. market, investment, impaired, unimpaired), the interests appraised (e.g. fee, partial), important assumptions or hypothetical conditions, and the effective date of the valuation. Based on this and other key information, the appraiser relies on peer-reviewed methodology to formulate an acceptable workplan.
aim at essentially the same goals, there remain significant differences between the two sets of standards. These differences result primarily from accumulated differences in appraisal methodology. In June, 2006, the International Valuation Standards Committee and the Appraisal Foundation jointly issued a memorandum of understanding, called the "Madison Agreement", in which they pledged to work together toward the goal of reconciling the differences between the two sets of standards.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and its territories. USPAP, as it is commonly known, was first developed in the 1980s by a joint committee representing the major U.S. and Canadian appraisal organizations. As a result of the savings and loan crisis
Savings and Loan crisis
The savings and loan crisis of the 1980s and 1990s was the failure of about 747 out of the 3,234 savings and loan associations in the United States...
, the Appraisal Foundation
The Appraisal Foundation
The Appraisal Foundation located in Washington, D.C., was formed in 1987 by eight major appraisal organizations to promote professionalism in valuation in the United States of America...
(TAF) was formed by these same groups, along with support and input from major industry and educational groups, and TAF took over administration of USPAP.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
Financial Institutions Reform, Recovery and Enforcement Act of 1989
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 , , is a United States federal law enacted in the wake of the savings and loan crisis of the 1980s....
(FIRREA) authorized the Appraisal Subcommittee (ASC), which is made up of representatives of the leading U.S. government agencies and non-governmental organizations empowered to oversee the U.S. mortgage and banking system. The ASC provides oversight to TAF.
TAF carries out its work through two divisions – the Appraisal Standards Board
Appraisal Standards Board
The ASB develops, interprets and amends the Uniform Standards of Professional Appraisal Practice . The ASB is composed of seven appraisers who are appointed by the Board of Trustees of The Appraisal Foundation. Activities of the Board are directed by the Chair, who is appointed by the Board of...
(ASB) and the Appraisal Qualifications Board (AQB). The latter group sets forth minimum qualifications for appraisal licensure, and its work has been adopted by all states and territories. The ASB maintains USPAP, and issues updates in January of even numbered years.
All US states and territories require appraisal licensure for valuation work performed for Federally regulated institutions; however, 35 states and territories of the US require appraisal licensure for all valuation work performed, whether Federally regulated or for other use.
Since 2006, USPAP has been updated in a 2 year cycle, which begins on January 1 of even number years. The current version of USPAP is available at www.appraisalfoundation.org and has an effective date of January 1, 2010.
Origins of USPAP
USPAP was originally written in 1986-87 by an ad-hoc committee representing the various appraisal professional organizations in the U.S. and Canada. The copyright to USPAP was donated to TAF on April 27, 1987. While USPAP answers a specific regulatory need in the U.S., it has also been adopted by many appraisal professional organizations throughout North and South America, Europe, and Asia.USPAP represents the generally accepted and recognized standards of appraisal practice. At its organizational meeting held on January 30, 1989, the Appraisal Standard Board (ASB) unanimously approved and adopted the original USPAP as the initial appraisal standards promulgated by ASB. USPAP may be amended, Interpreted, or retired by ASB after exposure to the users of appraisal services and the public in accordance with established rules of procedure.
Over the years, the USPAP document has evolved in content and organisational structure in response to changes in appraisal practice. The ASB has developed a process for developing both standards and guidance based, in part, on written comments submitted in response to exposure drafts and oral testimony.
Standards vs. methods
While USPAP provides a minimum set of quality control standards for the conduct of appraisalReal estate appraisal
Real estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property's Market Value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently...
in the U.S., it does not attempt to prescribe specific methods to be used. Rather, USPAP simply requires that appraisers be familiar with and correctly utilize those methods which would be acceptable to other appraisers familiar with the assignment at hand and acceptable to the intended users of the appraisal. USPAP directs this through what is called the Scope of Work rule. At the onset of an assignment, an appraiser is obligated to gather certain specified preliminary data about the project, such as the nature of the property to be appraised, the basis of value (e.g. market, investment, impaired, unimpaired), the interests appraised (e.g. fee, partial), important assumptions or hypothetical conditions, and the effective date of the valuation. Based on this and other key information, the appraiser relies on peer-reviewed methodology to formulate an acceptable workplan.
Standards, Statements, and Advisory Opinions
USPAP consists of ten (10) Standards which cover the development and reporting of valuation; and ten (10) Statements regarding specific practices in appraisal (five of which have been retired.) Standards and Statements are considered binding. In addition, there are 32 Advisory Opinions which, as the name implies, are only advisory in nature and are thus non-binding.USPAP and the International Valuation Standards
While USPAP and the IVSInternational Valuation Standards Committee
The International Valuation Standards Council is charged with developing robust and transparent procedures for performing international valuations through a single set of globally recognized valuation standards, acceptable to the world’s capital markets organisations market participants and...
aim at essentially the same goals, there remain significant differences between the two sets of standards. These differences result primarily from accumulated differences in appraisal methodology. In June, 2006, the International Valuation Standards Committee and the Appraisal Foundation jointly issued a memorandum of understanding, called the "Madison Agreement", in which they pledged to work together toward the goal of reconciling the differences between the two sets of standards.