Untitled Document

Posted 12-12-07.

Page 15: At mid-page just before the section entitled "Value vs. Cost vs. Price" add the below text.

Intended User

The term "intended user" has a specific meaning in USPAP which defines intended user as:

INTENDED USER: 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. (USPAP)

The client might identify to the appraiser a third party who will base a purchasing decision on the appraiser's value opinions. Such a third party should be considered an intended user of the appraisal report. As another example, heirs might be identified by the client as intended users since they will be making use of the appraisal report to equitably divide inherited property. When identifying intended users, the appraiser ascertains their intended use of the report and any additional report developing or reporting issues that must be addressed in order to satisfy those intended uses.

But there is no need to automatically consider certain parties as intended users in certain circumstances. Only if identified as intended users through communication with the client need they be listed. Here are some examples:

The appraiser is doing a federal non-cash charitable contribution appraisal or a federal estate appraisal. It is apparent that the client will be providing the appraisal report to the IRS. But should the IRS automatically be included as an intended user? No. The user and use must first be identified by the client.
You perform a damage claims appraisal for your client, the shipper (i.e., the owner of the property.) Chances are your appraisal will be sent by the client to the carrier's claims department for damage claims settlement purposes, but does that automatically make the moving company an intended user? No. The user and use must first be identified by the client.
The client requests a replacement value appraisal in order that she can obtain insurance coverage for her valuable antiques. The insurance company will make use of the appraisal for underwriting purposes in order to establish policy premiums, but should the insurance company automatically be considered an intended user? No. The user and use must first be identified by the client.

As defined by USPAP, intended users are "the client and any other party as identified … by the appraiser on the basis of communication with the client at the time of the assignment." Just because a party might receive or make use of a report does not automatically qualify them as an intended user. The appraiser must identify both the intended users as well as the intended uses of the report since this information affects the entire appraisal assignment including the scope of work determination as well as the type of report to be prepared (Self-Contained, Summary, or Restricted Use.) In the above scenarios, the parties receive the appraisal report through established processes of disclosure or regulations, and the appraiser may be unaware of how they intend to use the report. If that is the case, such parties should not be included as intended users.

USPAP's Statement on Appraisal Standards No. 9 Identification of Intended Use and Intender User states:

Parties who receive a copy of an appraisal, appraisal review, or appraisal consulting report as a consequence of disclosure requirements applicable to an appraiser's client do not become intended users of the report unless they were specifically identified by the appraiser at the time of the assignment. (USPAP)