More on USPAP 2016-2017

A couple of weeks ago I posted on the proposed modification to USPAP 2016-2017.  There were not any major changes to the document, just a continued refinement in order to make the standards a better fit with further clarifications.

Dave Maloney of Appraisal Course Consultants recently sent out his newsletter with an interesting topic and change that appears to have been not noted or emphasized in the exposure drafts.  The change adds the phrase "or an oral report" to the Record Keeping rule in which the workfile must contain sufficient content and information from the restricted appraisal oral report to produce an Appraisal Report. This will have a great impact on record keeping and research for all oral reports.

Dave explains the concerns well in the below block quote from his newsletter.  He has also contacted the ASB for further clarifications and reasoning.  It very well be one of the real estate issues that unfortunately again negatively impacts the personal property profession.  Dave will report when he receives a response.

Dave Maloney of Appraisal Course Consultants reports

In the above article we mentioned a change that has been inserted into the ASB's 2015 Summary of Actions but which was not highlighted as such by the ASB. The change involves the addition of the phrase "or an oral report" to the RECORD KEEPING RULE. The bullet is one of several which address what the workfile must contain. As changed, this particular bullet now states that, "a workfile in support of a Restricted Appraisal Report or an oral report must be sufficient for the appraiser to produce an Appraisal Report;" (emphasis added). In prior editions of USPAP there has never been a requirement that appraisers be able to produce a written Appraisal Report from an earlier oral report. This apparent change first made its appearance in the fourth and final exposure draft at which time the change was not underscored and no rationale for its addition was given as is the convention when material is being added. Nor was this change highlighted in the ASB's final 2015 Summary of Actions.

The requirement that appraisers have a workfile that contains information which would enable the appraiser to convert what was originally merely an oral report to an Appraisal Report at some time in the future is an onerous one, indeed. The implications of this addition are enormous for the personal property appraiser.

Why? Oral reports are often performed by the personal property appraiser for intended uses which do not require either listing or photographing the subject property — property which could number in the hundreds or thousands of items (many of which are often of only nominal value.) An example would be siblings inheriting an estate full of common, everyday household goods who just want to have a "walk through" oral appraisal report in order to determine if the inherited estate contains anything of significant value.

Indeed, the client often does not have time for nor wish to pay for the appraiser to photo document all items or audio record descriptions of all items which would be necessary to do if the appraiser is now required to be prepared to produce a written Appraisal Report from an oral report workfile. Without such recordation of the SR 8-2(a) identity of the property and its value characteristics, the appraiser would be hard pressed to produce an Appraisal Report years down the road of personal  property for which the client had only needed an oral report at the time.

While being in a position to use the workfile to convert a Restricted Report into an Appraisal Report is understandable, to prepare a workfile containing sufficient information to convert an oral report into an Appraisal Report is often impractical given the volume and type of property being appraised, the normal needs of the client and other intended users seeking personal property oral appraisal reports, and the usual intended uses of the such oral reports.​

We have requested clarification from the ASB and will provide you with their response in a future newsletter.

Source: Appraisal Course Consultants