Policies & Procedures
To all clients including banks, mortgage companies, appraisal management
companies and any other person or company contracting with us to perform
an appraisal assignment.
At Accurate Appraisals Inc. we strive to follow local laws and the
Uniform Standards of Professional Appraisal Practice (U.S.P.A.P.).
All of the appraisal assignments with interior inspections will have
interior photos of the subject property, including but not limited
to any and all deferred maintenance, damage and items that are not
normal wear for the home being appraised. Please do not request us
to remove any photos from any report or ask us to over look any external
influences of the subject property.
Be sure you know who the client is before ordering the report. If
the client changes this will require a new
assignment thus a new report with a new effective date and a new fee.
It is a violation of U.S.P.A.P. to change a client’s name on
a report after the report has been delivered. Please refer to Advisory
Opinions #26 and #27 for explanation. For your convenience these are
outlined below. The appraisal foundation has a copy of U.S.P.A.P. on
line for review. http://www.appraisalfoundation.org
It is a violation of U.S.P.A.P. to perform an appraisal with a predetermined
value. Please do not ask us to give you a value or value range of a
property before the appraisal is completed. In the state of Michigan,
you can take the State Equalized Value (S.E.V.) of a property and multiply
it by two and get an idea of what the state has the home valued at.
There is no guarantee that the appraisal will match, be higher or lower
than this number it is just a reference point. Many local municipalities
have this information on line, please refer to our LINKS page for the
ones we have found.
ADVISORY OPINION 26 (AO-26)
- This communication by the Appraisal Standards
Board (ASB) does not establish new standards
or interpret existing standards. 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.
SUBJECT: Readdressing (Transferring) a Report
to Another Party
APPLICATION: Real Property, Personal Property,
and Intangible Property
THE ISSUE:
After an assignment has been completed and
the report has been delivered, an appraiser
may be asked to “readdress” (transfer)
the report to another party. Does USPAP allow an appraiser to “readdress” (transfer)
a report by altering it to indicate a new
recipient as the client or additional intended user when the original
report was completed for another party
Relevant USPAP & Advisory References (AO-26)
- The Confidentiality
and Conduct sections of the ETHICS RULE.
- Standards Rules such
as 1-2(a) and 1-2(b); 7-2(a) and 7-2(b);
and 9-2(a), which require an appraiser to identify
the client, intended users, and intended
use.
- Standards Rules such as
2-1(a), 8-1(a), 10-1(a), which require an
appraiser to clearly and accurately set forth the appraisal
in a manner that is not misleading.
- SUPPLEMENTAL STANDARDS RULE, which
requires an appraiser to ascertain whether
supplemental standards apply to the assignment
in addition to USPAP.
- Statement on Appraisal Standards No. 9 (SMT-9),
which requires the appraiser to identify
and disclose the client and intended users and
the intended use in an appraisal, appraisal
review, or appraisal consulting assignment.
- Statement
on Appraisal Standards No. 10 (SMT-10), which
describes applicability of USPAP in federally
related transactions.
- Advisory Opinion 25 (AO-25), which covers clarification
of the client in a federally related transaction.
- Advisory
Opinion 27 (AO-27), which addresses appraising
the same property for a new client.
No. Once a report has been prepared for a
named client(s) and any other identified intended
users and for an identified intended use,
the appraiser cannot “readdress” (transfer)
the report to another party.
USPAP defines the Client as:
The party or parties who engage an appraiser
(by employment or contract) in a specific
assignment (bold added for emphasis).
Assignment is defined as:
A valuation service provided as a consequence
of an agreement between an appraiser and
a client (bold added for emphasis).
Intended Use is defined as:
The use or uses of an appraiser’s reported appraisal, appraisal
review, or appraisal consulting assignment
opinions and conclusions, as identified by the appraiser based on
communication with the client at the time of the assignment (bold
added for emphasis).
Intended User is defined as:
The client and any other party as identified,
by name or type, as users of the appraisal,
appraisal review, or appraisal consulting
report by the appraiser on the basis of communication
with the client at the time of the assignment
(bold added for emphasis).
Identification of the client, any other intended
users, and the intended use are key elements
in all assignments. Because these identifications
drive the appraiser’s scope of work decision, as well as other
elements of the assignment, they must be determined at the time of
the assignment. They cannot be modified after an assignment has been
completed. See Statement on Appraisal Standards No. 9 (SMT-9) for
further clarification.
Illustrations (AO-26)
Question #1
An appraiser was engaged by Client A to appraise
a property. The appraiser
delivered the appraisal report to Client A. The client has decided not to pursue
the transaction that generated the need for the appraisal report. The appraiser
is contacted by Client B. Client B requests that the original report be readdressed
(transferred) by replacing Client A’s name with Client B’s name in
the report. Is this acceptable?
Answer: No. Simply changing the client name
on the report cannot change or replace the
original appraiser-client relationship that
was established with Client A. Therefore, this action is misleading.
Question #2
How can this circumstance be handled according
to Standards?
Answer: The appraiser can consider Client
B’s request as a new assignment.
In so doing, the appraiser may establish a new appraiser-client relationship
with Client B and appraise the property for this new client. Important considerations,
i.e., confidential information and other factors are further addressed in AO-27 – "Appraising
the Same Property for a New Client".
Question #3
Why might Client B want their name on the
report that was completed for Client A?
Answer: Client B may want to establish an
appraiser-client relationship because it provides all the rights,
obligations, and liabilities such a relationship
places on the appraiser.
A prudent method to establish an appraiser-client
relationship is to have a written engagement
letter or contract with any client at the
time of the assignment.
ADVISORY OPINION 27 (AO-27)
This communication by the Appraisal Standards
Board (ASB) does not establish new standards
or interpret existing standards. 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.
SUBJECT: Appraising the Same Property for a
New Client
APPLICATION: Real Property, Personal Property,
and Intangible Property
THE ISSUE:
Situations often arise in which appraisers
who have previously appraised a property are
asked by a different party to appraise the same property. In some instances this request
arises very soon after the first appraisal; in others, it may be months
or years later. Under what circumstances can an appraiser accept an
assignment to appraise a property for a prospective client when that
appraiser has previously completed an appraisal of the same property
for another client?
Relevant USPAP & Advisory References (AO-27)
- Confidentiality
section of the ETHICS RULE.
- Statement on Appraisal Standards
No. 9 (SMT-9), which addresses intended use
and intended users in an assignment.
- Advisory Opinion 25 (AO-25) which covers
clarification of the client in a federally
related transaction.
- Advisory Opinion 26 (AO-26) which addresses reappraising/transferring
a report to another party.
Accepting the assignment from the second
potential client is not prohibited by USPAP,
assuming any existing confidential information
is handled properly.
Several parts of the Confidentiality section
of the ETHICS RULE are pertinent to this
matter.
An appraiser must not disclose . . . assignment results prepared
for a client to anyone other than the client
and persons specifically authorized by the client . . .
An appraiser cannot disclose the results
of a particular assignment, performed for
a particular client, to anyone other than those designated by that client. However,
an understanding of the definitions of assignment,
assignment results, and client are key to
a complete understanding of this requirement.
Assignment – a valuation service provided as a consequence
of an agreement between an appraiser and
a client
Client – the party or parties who engage an appraiser (by employment
or contract) in a specific assignment
Assignment Results – an appraiser’s opinions and conclusions
developed specific to an assignment
As can be seen in the definitions, both the
client and the assignment results are specific
to an assignment. If there is a new potential client, valuation
services performed for that new client would constitute a new assignment and
the assignment results would be specific to that new assignment. Therefore,
acceptance and performance of the new assignment to appraise the same property
would not be considered revealing the first client’s assignment results
to the second client, even if the value conclusions were the same. It should
be noted that the value conclusion could easily be different if the effective
date or the scope of work changed in any manner. It should
also be noted that USPAP requires the appraiser
to provide an unbiased opinion of value to each client.
Obtaining a Release (AO-27)
As a matter of business practice, some appraisers
request a release from a prior client before
accepting an assignment to appraise the same
property for a new client or to disclose
the assignment for the second client to the first client. However,
USPAP does not require this. Also, appraisers should be aware
that, in some cases, informing a client about
the existence of another client and the fact that the property was
appraised for that other client may not be compliant with the portion
of the Confidentiality section of the ETHICS RULE, which states:
An appraiser must protect the confidential
nature of the appraiser-client relationship.
Confidential Information (AO-27)
In all assignments the appraiser must comply
with the Confidentiality section of the ETHICS
RULE with respect to the handling of confidential
information. Confidential
information is defined in USPAP as:
information that is either
* identified by the client as confidential
when providing it to an appraiser and that
is not available from any other source; or
* classified as confidential or private by
applicable law or regulation
The Confidentiality section of the ETHICS
RULE states:
An appraiser must be aware of, and comply
with, all confidentiality and privacy laws
and regulations applicable in an assignment.
An appraiser must not disclose confidential
information . . . . to anyone other than
the client and persons specifically authorized
by the client . . .
If a prior assignment included any confidential
information, its disclosure to a different
client or intended user would violate the
ETHICS RULE if the information were still classified as confidential information. This
includes the requirement to comply with all confidentiality and privacy laws
and regulations.
Client Expectations (AO-27)
At times, an appraiser’s client may believe that his or her legitimate
business intent could be harmed by that appraiser providing an appraisal of the
subject property of that assignment to another client. In such cases, the
client and the appraiser may stipulate in their service agreement the conditions
under which the appraiser may or may not appraise the same subject property. A
client involved in litigation may stipulate that the appraiser cannot appraise
a subject property for the opposing party in that litigation. As
another example, if an appraiser is providing
the value of a property to a client who is planning to sell that
property in an auction, the appraiser and client may agree that the
appraiser will not appraise the same property for a party planning
to participate in the bidding process.
Illustrations (AO-27)
Example A - Litigation
An appraiser performs an appraisal for a
client involved in litigation and then is
requested to appraise the same property for
the opposing party. Is accepting
the assignment for the second client prohibited
by USPAP?
Answer: No, assuming confidential information
is handled correctly. However, there are
common business practices in such circumstances.
Often, the opposing parties each hire an appraiser to appraise the subject property. If
the opposing parties do not plan to hire
one appraiser jointly, each party could make it a part of the agreement between
the appraiser and the client (the engagement letter or contract) that the appraiser
is not to appraise the property for anyone
representing the opposing side of the legal action.
In the absence of such an agreement between
the client and the appraiser, the appraiser
should consider the presence of confidential
information. The
knowledge of confidential information may
prevent the appraiser from accepting the
second assignment. The appraiser must decline the second assignment if:
1 the appraiser used confidential information
in performing the first assignment;
2 that information would not be available
from any other source; and
3 credible results cannot be derived without
the use of this confidential information.
However, the appraiser may accept the second
assignment, making sure to not disclose any
confidential information from the original
assignment to the second client, if
1 he information is available from another
source (meaning it is not confidential information,
as defined); or
2 the confidential information is not material
to deriving credible assignment results.
However, the appraiser must ensure that confidential
information is not disclosed, even if it
has no impact on the assignment results (such
as the litigation strategy of attorneys representing
the first client).
Example B – Competing Banks
If an appraiser has appraised a property
for Bank A and then is approached by Bank
B to appraise the same property, does USPAP prohibit acceptance of the second
assignment?
Answer: No, assuming confidential information
is handled correctly. This constitutes a
second assignment, a new client and a new
agreement between a client and an appraiser.
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