Navigating the world of the Uniform Standards of Professional Appraisal Practice (USPAP) can be overwhelming for newcomers to the appraisal field. This blog post sets out to clarify these misconceptions and shed light on what USPAP compliance means.
What is USPAP?
The Uniform Standards of Professional Appraisal Practice were established to uphold a high level of professionalism within the appraisal industry. Developed by the Appraisal Standards Board (ASB) in 1987, USPAP provides a framework for ethical and professional appraisal practices. Whether as an appraiser of personal property, real property or business, adhering to USPAP is vital for maintaining credibility and trust.
Key components of USPAP include ethics rules, competency standards, and reporting requirements. While many appraisers may have a general grasp of these elements, misconceptions often cloud the understanding of what true compliance entails.
Myth 1: USPAP Compliance is Only for Accredited Appraisers
One myth is that only accredited or licensed appraisers need to follow USPAP.
USPAP compliance is required for all appraisers. This extends to those doing appraisal reviews, consultations, or any valuation service. For example, a specialist who works at an auction house who also produces appraisals must adhere to USPAP guidelines, whether or not they are accredited by an appraisal organization. Recognizing the broad applicability of USPAP is essential for any professional aiming to maintain integrity and quality.
Myth 2: USPAP is a Set of Static Rules
Some appraisers mistakenly think that USPAP consists of unchanging rules.
USPAP is regularly reviewed and updated by the Appraisal Standards Board (ASB) to address the industry’s changing market and legal environment, technology, global health emergencies etc... For instance, the 2024-2025 USPAP revision saw significant updates related to anti-discrimination laws. Staying informed about these periodic changes is required for all appraisers aiming to maintain their USPAP compliance.
Myth 3: Compliance is Just About Following Rules
Many appraisers equate USPAP compliance solely with adhering to appraisal standards and regulations.
However, compliance is more than simply checking off boxes—it's about maintaining the integrity and credibility of the appraisal profession. Ethical considerations are central to USPAP principles, and designed to foster public trust.
The Importance of Competency in USPAP Compliance
Understand that competency in the subject matter of your appraisal is foundational to being USPAP compliant.
To claim competency in a given field, appraisers must build and expand their skills and knowledge through continuing education or by gaining practical experience which can include consulting with subject matter experts. Professional appraisers should regularly attend conferences, workshops and webinars on connoisseurship or market trends to hone their expertise and expand their business.
Myth 4: Compliance is an Optional Add-On
Some appraisers may consider USPAP compliance to be optional.
Non-compliance can yield serious consequences, including loss of credibility and legal repercussions. For instance, failure to comply with USPAP can result in sanctions, which vary from fines to suspension of appraisal licenses. Compliance is not merely a good practice; it is essential for the legitimacy of your appraisal Practice.
Understanding the Importance of Well-Written Reports
Many practitioners assume that reporting is just about delivering a final product to the client.
Actually effective reporting is a key element of USPAP compliance. Clear, accurate, and thorough reports provide transparency to clients and their advisors. Throughly researched and clearly communicated appraisals not only enhance an appraiser’s credibility, it also reduces the risk that your appraisal will be challenged.
Myth 5: All Appraisers Interpret USPAP the Same Way
Another common misunderstanding is that all appraisers have the same interpretation of USPAP standards and rules. Often the proper application of a USPAP standard is not clear cut. In fact, in 2024, the Advisory Board also published a companion volume, USPAP Guidance and Reference Manual which includes Advisory Opinions and FAQs "to illustrate the applicability of USPAP in specific situations and to offer advice for the resolution of appraisal issues and problems." Discussion of Advisory Opinions are typically a key topic in USPAP certification classes.
It's crucial to understand that the application of standards can vary depending on different appraisal situations, as well as state and local laws and regulations. If you have a question, refer to the Guidance and Reference Manual, post on professional forums, or join listservs. Contact experienced and respected educators and colleagues for guidance. Interacting with others who interpret and apply these standards can broaden your network and encourage collaboration within the appraisal community.
STAY UP TO DATE
Recognizing that USPAP is revised biennially is crucial. By following USPAP principles and guidelines, you enhance your professionalism and credibility within the appraisal community, leading to increased referrals and business growth.
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