Posted 12-19-07

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Appraisal Updates

The term “update” is often used by clients when they are seeking an appraisal of property that was the subject of a prior assignment.

Clients request appraisal updates for various reasons. Insurance companies normally advise their clients that personal property appraisals be updated every three years. Regarding business personal property, it may be necessary to appraise collateralized equipment every periodically years for financing purposes. The potential for periodic appraisal updates are one reason the appraiser should retain related assignment workfiles indefinitely.

When updating an insurance appraisal, the appraiser typically visits the property location to ascertain that the items still exist. The appraiser must also confirm the present condition of items which were previously appraised. In addition, the appraiser must delete items no longer in the client's possession and add any new property which the client has acquired since the date of the last appraisal.

Updates are not extensions of the prior assignment. Rather, they are entirely new assignments. Note that the scope of work for the update assignment might be different from the scope of work for the original assignment. For instance, in the original assignment the appraiser might have conducted a personal inspection of the property. Such an inspection would be reflected in the assignment’s scope of work statement. But assume that in the update assignment in order to reduce costs the client merely provided photographs to the appraiser to show the property’s current condition. The scope of work statement for the update appraisal would necessarily need to reflect that the client did not personally inspect the property, but rather he based his opinions on photographs and other information provided by the client. (Of course, the update report would also have to include a disclosure of the limiting condition encountered and extraordinary assumptions made because of the lack of a hands-on property inspection.)

USPAP notes that there are different ways in which appraisal report updates can be prepared. For personal property appraisal report updates, the most common methods are:

• To prepare a completely new report containing all the necessary information and analysis required to satisfy the reporting requirements of USPAP Standard 8 without attachment of or reference to the prior report.
  
• To prepare a new report that incorporates by use of attachments of or reference to specified information and analysis from the prior report so that the new information combined with that which is attached from the prior report satisfies all the reporting requirements of USPAP Standard 8.