Navigating USPAP 2006 - New Book

WorkingRE Online – click here for full article: Effective July 1, 2006 the new USPAP takes effect. By all accounts the changes are some of the most significant ever as well as some of the most welcome. USPAP instructor and author Lee Hess takes you through a series of common questions and answers in his new book “Navigating (New) USPAP” - By Lee R. Hess, PhD For the past five years I have been answering questions about USPAP and how it applies to the everyday work of appraisers. Even veteran appraisers have questions about how USPAP affects their everyday appraising. Effective July 1, 2006, USPAP changes dramatically. The following is excerpted from Navigating USPAP, a new publication with hundreds of questions and answers about the new USPAP and what it means for appraisers (to order see below). What are the biggest changes that have occurred for 2006?

Conceptually: USPAP now identifies standards that apply in all appraisal assignments. Although the appraiser’s role in the development process has not changed, there are many other significant changes.

The new Scope of Work Rule (SOW) replaces the Departure Rule as one of the five rules (Ethics, Competency, Scope of Work, Jurisdictional Exceptions and Supplemental Standards).

The new SOW Rule continues to be based on what is required to produce credible assignment results. The term “credible” is also defined so appraisers understand exactly what they are attempting to achieve. Also, the term “appraiser’s peers” has been modified for clarity. Items Removed: The most important item removed is the Departure Rule. (Is that cheering I hear?) The result is that the Standards Rules no longer contain the terms complete and limited appraisals.

SMT 7 (Permitted Departures from Specific Rules) and AO 15, which deals with the same subject, were both retired.

According to the Appraisal Standards Board (ASB), these items were taken out to: resolve misunderstandings related to departure; enhance public trust in appraisal practice and to improve the clarity of USPAP. AO 8, which deals with fair value appraisals, was also retired as the Financial Accounting Standards Board changed its definition of fair value. Scope of Work Rule: The SOW Rule was added to emphasize the requirements of property identification. Also included are how to determine an appropriate SOW and how to disclose it.

New Advisory Opinions were also added.

• AO 28 was added to give guidance on how to meet the requirements of the new SOW and how to disclose this decision. The ASB includes specific illustrations to clarify the application of these procedures.
• AO 29 is added to discuss what an acceptable SOW looks like and how to apply SOW in specific assignments.

Extensive Rewrite: As you can imagine, Departure was mentioned throughout USPAP. Removing it has caused all of the Standard Rules to be revised. You can view all of the changes at The Appraisal Foundation website. (story continued below) Here are some Specific Questions (answers can be found in the full Working RE Online article) Mr. Hess addresses:

• How do I use hypotheticals and extraordinary assumptions?
• How far do I have to go in describing the property around a house that I am appraising?
• I am having trouble understanding some of the terms used in USPAP. Can you define: cadastral, fractional interest, redaction and AVMs?
• Additional Q&A on this blog Ordering: Navigating (the New) USPAP Navigating (the New) USPAP by Lee R. Hess, PhD. Navigating USPAP, which contains hundreds of everyday questions and answers, is available on CD from tom@lrhandassoc.com or by calling (760) 436-1584. The price is $29.95. If you cite this article, you will receive a 15 percent discount. About the Author Dr. Lee Hess is a nationally-certified USPAP instructor, expert witness and author of 15 books. He can be reached at lee@lrhandassoc.com or (760) 436-1584.

Appraisal , Real Estate , Appraiser , USPAP , Regulation , Illinois