New USPAP Changes Effective January 1, 2010

As we discussed in a post in June, The Appraisal Foundation, a congressionally authorized non-profit organization that fosters professionalism among appraisers by setting qualifications and standards, announced that its Appraisal Standards Board (ASB) adopted revisions for the 2010-2011 edition of the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP are the generally accepted performance and ethical standards for the appraisal profession in the United States. Standards are included for real estate, personal property, business, and mass appraisal. And, these changes go into effect on January 1, 2010.

The Appraisal Foundation has issued a question and answer document that is designed to help answer any questions that might arise. You can visit their website to learn more about all of the changes.

In particular, they have highlighted one revision to USPAP that will affect each assignment starting in 2010. Appraisers will be required to disclose to their client, prior to engagement and in the certification of appraisal reports, “any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.”

As always, Present Value is USPAP compliant.

By: Present Value

Tags: present value, The Appraisal Foundation, USPAP
Posted in Appraisal Terms | 1 Comment »

Scope of Work

The USPAP (Uniform Standards of Professional Appraisal Practice) has always required that real estate appraisers show the scope of work required for credible results. But in recent years, it was found that appraisers did not fully understand this process, so USPAP was updated in 2006 with a new scope of work rule. The rule requires that the minimum standards for scope of work are a) expectations of the client and other users, and b) the actions of other appraisers who carry out similar assignments. The rule also states that appraisers need to identify six components of the appraisal before the actual appraisal begins:

• The client requesting the appraisal
• The intended use of the appraisal report
• The value (market, foreclosure, investment)
• Any hypothetical conditions or assumptions
• The date of the appraisal report
• The relevant features of the property

Using these components, the appraiser identifies the scope of work.

The scope of work is the first step in any appraisal. Without a specific scope of work, the conclusions of an appraisal may not be viable. By defining the scope of work, an appraiser can develop a value for a property, which is the intended use of the appraisal.

By: Present Value

Tags: scope of work, USPAP
Posted in Real Estate Appraisal | 1 Comment »

Certified Machinery and Equipment Appraisal

We have written a number of blog posts about machinery and equipment appraisals, including Common Types of Appraisal Reports, What’s It Worth?, and Insurable Value. In this post we will cover what should be included in a certified machinery and equipment appraisal (CMEA) report.

A certified machinery and equipment appraisal is a comprehensive and detailed appraisal report that provides an accurate and descriptive account of the value of specific machinery and equipment. CMEA reports include photographs, model numbers, serial numbers, and other descriptive information about the machinery and/or equipment. To determine the worth of machinery and equipment, an appraiser determines the value of equipment based on research, personal inspection, and contact with manufacturers and suppliers.

A CMEA should meet the standards set by the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), so that your certified equipment appraisal report will hold up under scrutiny from financial institutions, government agencies, buyers, sellers, shareholders, or partners.

By: Present Value

Tags: certified machinery and equipment appraisal, CMEA, USPAP
Posted in Appraisal Terms, Machinery & Equipment, Machinery & Equipment Appraisal | No Comments »

The Appraisal Foundation Announces 2010-2011 Edition of USPAP

On June 9, 2009, The Appraisal Foundation, a congressionally authorized nonprofit organization that fosters professionalism among appraisers by setting qualifications and standards, announced that its Appraisal Standards Board (ASB) adopted revisions for the 2010-2011 edition of the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP are the generally accepted performance and ethical standards for the appraisal profession in the United States. Standards are included for real estate, personal property, business, and mass appraisal.

The new edition is expected to be available in October. However, ASB has issued a Summary of Action that will enable appraisers to become familiar with the changes that are part of the 2010-2011 edition. The changes will take effect on January 1, 2010.

The majority of revisions were made to the ETHICS RULE, the COMPETENCY RULE and STANDARD 3: Appraisal Review, Development and Reporting.

Two of the most significant changes are as follows:

• “A requirement was added to the Conduct section of the ETHICS RULE, stating that, prior to accepting an assignment (and if discovered at any time during the assignment), an appraiser must disclose to the client and in the report certification any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.”

• “The appraiser’s obligation to allow a client access to his or her workfile when providing a Restricted Use Appraisal Report was removed.”

Present Value is a certified appraisal company and provides USPAP-compliant appraisal reports.

By: Present Value

Tags: appraisal definitions, business appraisals, Equipment Appraisals, Real Estate Appraisal, USPAP
Posted in Appraisal Terms, Machinery & Equipment Appraisal, Real Estate Appraisal, business appraisals | No Comments »

Why use a certified appraiser?

A survey was recently conducted at an American Institute of Certified Public Accountants Conference in which more than 100 CPAs said that when assigning value to a business’s tangible assets, like machinery, one of the biggest problems they face is liability risk as a result of invalid information. This is one of the reasons why it’s important to have a certified appraiser research and assess your business’s assets and compose a reliable valuation report.

A certified machinery or equipment appraisal is one that is compliant with the standards of both the National Equipment and Business Builders (NEBB) Institute and the Uniform Standards of Professional Appraisal Practice (USPAP), and verified with a personal inspection, research, data, documentation, and photographs. A certified appraiser will eliminate guesswork and tell you the fair market value of your machinery and equipment, rather than your assets’ book value, which, unlike a fair market valuation, has no comparables. You can also ask a certified appraiser to tell you your equipment’s liquidation value, salvage value, or replacement cost.   Beware the valuation of auctioneers or machinery and equipment dealers. Auctioneers and dealers may deliver valuations inconsistent with fair market value in anticipation of an auction or a profitable sale. And most auctioneers and dealers who are asked to provide an appraisal report will not deliver one that is USPAP compliant, which means that it will not meet the needs of governing authorities. By relying on non-certified appraisers like these, you open yourself up to increased costs, liability, and risk.  Present Value is a certified member of the NEBB Institute and its professionals are USPAP compliant and provide customers with certified appraisal reports that meet the requirements of financial institutions, government agencies, buyers and sellers, shareholders, and business partners. For more information about the machinery and equipment appraisal services available through Present Value, click here. By: Present Value LLC

Tags: certified appraisal, equipment appraiser, Machinery and equipment appraisal, NEBB, USPAP
Posted in Machinery & Equipment | No Comments »