Posted 12-5-07. Updated 12-15-07.

Below is a summary of the major USPAP changes that apply to the personal property appraiser as approved by the Appraisal Standards Board (ASB) for inclusion in the new USPAP 2008-2009 (effective 1-1-2008 through 12-31-2009). The new USPAP is now available for purchase from The Appraisal Foundation.

The below changes have been incorporated into the 2nd edition of "Appraising Personal Property: Principles and Methodology" which is now available for purchase.

For our purposes, I am only mentioning the changes that have a direct impact on the personal property appraiser. The full text of the ASB's actions including rationale for these changes is available online.

Note the following are changes to the 2006 USPAP and will be incorporated into the new biennial USPSP for 2008-2009. These changes cause trickle-down minor edits at various locations throughout USPAP; regardless, the below gives a good idea of the major changes that have been made as they regard the appraising of personal property.

Scroll down to find the changes to make to your course book.

Supplemental Standards Rule and the Definition of Supplemental Standards

• Delete the Supplemental Standards Rule. This deletion does not change the appraisers responsibility to comply with all applicable local laws, regulations and guidelines. The ASB notes that the reason for this edit is that appraisers often have difficulty in identifying Supplemental Standards in the first place. "With this change, USPAP continues to require adherence to those assignment conditions that are necessary for proper development and reporting. The appraiser’s identification of the intended use and intended users drives the applicable assignment conditions."
  
• Delete the Definition of "Supplemental Standards". "In the ASB’s review of the issue and in collecting information, it became apparent that the majority of appraisers, users of appraisal services, and enforcement officials recognized that Supplemental Standards include laws and regulations. Appraisers must comply with laws and regulations because of the nature of law itself, not because of USPAP. Thus, continued use of Supplemental Standards as a defined term was unnecessary."

Ethics Rule and the Definition of Advocacy

• Make edits to the Ethics Section and delete the Definition of "Advocacy." "The edits to the ETHICS RULE make clear that advocating the cause or interest of any party or issue contradicts the requirement for independence. The edits to the ETHICS RULE render the definition of “advocacy” unnecessary because the term is used with its common English meaning. The edits do not diminish the prohibition against advocacy in appraisal practice; advocacy remains unacceptable."

Report Certification Requirements

• The ASB revised Standards Rule 8-3. The changes removed the requirement that the signing appraiser have a reasonable basis to believe that work done by others was credible from Standards Rule 8-3. "This change was supported by the argument that the signing appraiser may not be qualified to determine whether the work provided by the other appraiser is credible. Further, the appraiser who certifies the work “done by others” is credible may be providing a misleading representation to the intended user. Language was added clarifying that the signing appraiser(s) must not rely on the work of others if that appraiser has a reason to doubt that the work is credible. This edit was supported by the appraiser’s obligation to preserve public trust. The appraiser is responsible for the scope of work, including decisions to rely on the work done by others. The decision to rely on work done by others is governed by the same due diligence requirements that apply to judging the appropriate extent of research and analysis, namely that an acceptable scope of work satisfies the requirements of the Acceptability section of the SCOPE OF WORK RULE."

Highest and Best Use in Standards 7 and 8

• Standards Rules 7-3(a) and 8-2(a)(ix) were revised. "Personal property appraisal recognizes the concept that alternative property uses can affect value, but not all personal property appraisers use the term “highest and best use” to describe this analysis. Although it may not be stated as such, the analysis of highest and best use in a personal property context (including a mass appraisal of personal property) is addressed in terms of the most appropriate market or market level. To better reflect the conventions of the personal property appraisal discipline, changes were made to the personal property standards to remove the term “highest and best use.” The edit does not change the substance of the requirement, but better aligns the language with terminology more commonly used in personal property appraisal. The term “highest and best use” was not removed from the accompanying Comment to those Standards Rules because it provides a useful explanation for appraisers and the users of appraisal services who do recognize the terminology."

Reconciliation and Reporting Requirements in Standards Rule 7

• The requirements of reconciliation of the approaches used to arrive at value in Standards Rule 7-6(b) was edited to increase clarity and consistence. The ASB also deleted the Comment to Standards Rule 7-6 noting that "There is no specific reason why the reconciliation Rules should point out links to reporting when other equally significant connections are not similarly identified. Therefore, the references to the reporting standards in these two Standards Rules were deleted."
  
• In addition, the ASB deleted the Comment to Standards Rule 8-2(a)(vi) and 8-2(b)(vi) which required the reiteration of the report date and effective date of the appraisal noting "In communicating assignment results, the appraiser is already required to identify the report date and effective date of the appraisal in a manner that is meaningful and not misleading. For this reason the referenced paragraphs were deleted as unnecessary and potentially confusing."

Make the following changes to the 2007 edition of the course book:

Page ix: Delete table of contents line "Suplemental Standards Rule"
Page 3: In description of Lesson 7, delete reference to "Supplemental Standards Rule"
Page 206: Delete Para 6 "Supplemental Standards Rule"
Page 208: In the paragraph beginning with ""The Preamble also introduces..." delete reference to "Supplemental Standards Rule"
Page 213: Delete section entitled "Supplemental Standards Rule"
Page 211: After the first paragraph (ending with "...assignment competently.") add the following text:

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Competency applies to such issues as:

• The appraiser’s familiarity with the specific type of property,
• Familiarity with the market,
• Knowledge of value and market conditions within a particular geographic area,
• Recognition of and compliance with laws and regulations that apply to the appraiser or to the assignment.

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Page 216: Replace the last paragraph (beginning with "Standards Rule 8-4...") with the following paragraph:

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o Standards Rule 8-3. When relying on work done by others who do not sign the appraisal, the signing appraiser must have a reasonable basis for believing that those individuals are competent and must have no doubt that their work is credible. Each written personal property appraisal report must contain a signed certification that is similar in content to the format provided in Standards Rule 8-3.

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Page 215: Replace the mid-page paragraph beginning with "Standards Rule 7-3..." with:

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o Standards Rule 7-3. In developing a personal property appraisal, an appraiser must “analyze the current use and alternative uses of the property to encompass what is possible, legal, and physically possible” (USPAP) (i.e., the property's highest and best use — its appropriate market or market level) and must define and analyze the appropriate market (consistent with the type and definition of value) as well as related market conditions such as acceptability within the market, supply, demand, rarity and scarcity.

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Page 256: Replace the second paragraph from the bottom with the following paragraph.

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(a) analyze the current use and alternative uses to encompass what is profitable, legal, and physically possible, as relevant to the type and definition of value and intended use of the appraisal;

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Page 216: Replace the top most paragraph with the following paragraph:

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o Standards Rule 7-6. In developing a personal property appraisal, an appraiser must reconcile the quality and quantity of data available and analyzed within the approaches used; and reconcile the applicability or relevance of the approaches, methods and techniques used to arrive at the value conclusion(s). (USPAP).

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