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The Appraisal Standards Board, which develops, interprets, and amends the Uniform Standards of Professional Appraisal and Practice (USPAP), has adopted a revision for the 2014-2015 USPAP that will reduce the number of narrative report options available for real property appraisals. Currently, the narrative report options for real property appraisals include Self-Contained, Summary, and Restricted-Use reports. The two options presented in the 2014-2015 edition of USPAP will be the Appraisal Report and the Restricted Appraisal Report. The Appraisal Report will have the same standards as the current Summary Appraisal Report; and the Restricted Appraisal Report will have the same standards as the current Restricted-Use Appraisal Report.
The current Restricted-Use Appraisal report is the most condensed narrative report format, presenting limited analysis related to how the appraiser reached their value conclusion. This report option is typically reserved for an intended user who has a strong knowledge of the property being appraised. Additionally, this report option can only be used when there is only one intended user for the report. The Summary Appraisal report is the most commonly used narrative report, and summarizes the analysis appraiser used to reach their value conclusion. Finally, the most comprehensive narrative report currently available is the Self-Contained Appraisal Report which shows all of the analysis used by the appraiser to reach their value conclusion. The current Self-Contained and Summary Appraisal will not be available in the 2014-2015 USPAP.
The new Appraisal Report option will indicate the minimum level of reporting necessary for an assignment with multiple intended users, or for an assignment were a client needs further understanding of the appraiser’s rationale and conclusions. It will be the most applicable report option when the client does not have specified knowledge of the subject property. While this report option institutes a minimum level of information, the appraiser must determine if additional detail or explanation is required based on the needs of the client.
In its Rational for adopting these changes, The Appraisal Board states “The edits adopted are intended to improve consistency among the Standards. In addition, the Board received many comments over the years suggesting elimination of the Self-Contained Appraisal Report option.”
The reduced number of report options will make selecting the appropriate report option easier for the client. The Restricted Appraisal Report will be the best option for a report with a single intended user who has a strong knowledge of the subject property, while the Appraisal Report will be the best option for a report with multiple intended users or a client who does not have in-depth knowledge of the subject property. Commercial Investment Appraisers stays up to date on USPAP guidelines. For more explanation on appraisal methodology, visit our website at www.commercial-appraisers.com.