2012-13 Uspap Definitions

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CLIENT

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the party or parties who engage, by employment or contract, an appraiser in a specific assignment.
Comment: The client may be an individual, group, or entity, and may engage and communicate with the appraiser directly or through an agent.

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EXPOSURE TIME

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estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal.
Comment: Exposure time is a retrospective opinion based on an analysis of past events assuming a competitive and open market.

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EXTRAORDINARY ASSUMPTION

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an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which, if found to be false, could alter the appraiser’s opinions or conclusions.
Comment: Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.

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HYPOTHETICAL CONDITION

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a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.
Comment: Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.

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APPRAISAL

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(noun) the act or process of developing an opinion of value; an opinion of value.
(adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.

Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).

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APPRAISAL CONSULTING

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the act or process of developing an analysis, recommendation,
or opinion to solve a problem, where an opinion of value is a component of the analysis leading to the assignment results.

Comment: An appraisal consulting assignment involves an opinion of value but does not have an appraisal or an appraisal review as its primary purpose.

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APPRAISAL PRACTICE

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valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review, or appraisal consulting.
Comment: Appraisal practice is provided only by appraisers, while valuation services are provided by a variety of professionals and others. The terms appraisal, appraisal review, and appraisal consulting are intentionally generic and are not mutually exclusive. For example, an opinion of value may be required as part of an appraisal review and is required as a component of the analysis in an appraisal consulting assignment. The use of other nomenclature for an appraisal, appraisal review, or appraisal consulting assignment (e.g., analysis, counseling, evaluation, study, submission, or valuation) does not exempt an appraiser from adherence to the Uniform Standards of Professional Appraisal Practice

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APPRAISAL REVIEW

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the act or process of developing and communicating an opinion about the quality of another appraiser’s work that was performed
as part of an appraisal, appraisal review, or appraisal consulting assignment.

Comment: The subject of an appraisal review assignment may be all or part of a report, workfile, or a combination of these.

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APPRAISER

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one who is expected to perform valuation services competently
and in a manner that is independent, impartial, and objective.

Comment: Such expectation occurs when 36 individuals, either by choice or by requirement placed upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.

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APPRAISER’S PEERS

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other appraisers who have expertise and competency in a similar type of assignment

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ASSIGNMENT

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1) An agreement between an appraiser and a client to provide a valuation service;
2) the valuation service that is provided as a consequence of such an agreement.

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ASSIGNMENT RESULTS

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an appraiser’s opinions and conclusions developed specific to an assignment.

Comment: Assignment results include an appraiser’s:
-opinions or conclusions developed in an appraisal assignment, such as value;
-opinions of adequacy, relevancy, or reasonableness developed in an appraisal review assignment; or
-opinions, conclusions, or recommendations developed in an appraisal consulting assignment.

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ASSUMPTION

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that which is taken to be true

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BIAS

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a preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment.

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BUSINESS ENTERPRISE

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an entity pursuing an economic activity

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BUSINESS EQUITY

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the interests, benefits, and rights inherent in the ownership of a business enterprise or a part thereof in any form (including, but not necessarily limited to, capital stock, partnership interests, cooperatives, sole proprietorships, options, and warrants).

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CONFIDENTIAL INFORMATION

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information that is either:
-identified by the client as confidential when providing it to an appraiser and that is not available from any other source; or
-classified as confidential or private by applicable law or regulation

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COST

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the amount required to create, produce, or obtain a property.

Comment: Cost is either a fact or an estimate of fact.

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CREDIBLE

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worthy of belief.

Comment: Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use

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FEASIBILITY ANALYSIS

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a study of the cost-benefit relationship of an economic endeavor

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INTANGIBLE PROPERTY (INTANGIBLE ASSETS)

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nonphysical assets, including but not limited to franchises, trademarks, patents, copyrights, goodwill, equities, securities, and contracts as distinguished from physical assets such as facilities and equipment.

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INTENDED USE

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the use or uses of an appraiser’s reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions, as identified by the appraiser based on communication with the client at the time of the assignment

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INTENDED USER

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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.

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JURISDICTIONAL EXCEPTION

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an assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP.

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MARKET VALUE

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a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal

See Comment in USPAP

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MASS APPRAISAL

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the process of valuing a universe of properties as of a given date
using standard methodology, employing common data, and
allowing for statistical testing.

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MASS APPRAISAL MODEL

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a mathematical expression of how supply and demand factors interact in a market

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PERSONAL PROPERTY

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identifiable tangible objects that are considered by the general public as being “personal” - for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate.

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PRICE

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the amount asked, offered, or paid for a property.

Comment: Once stated, price is a fact, whether it is publicly disclosed or retained in private. Because of the financial capabilities, motivations, or special interests of a given buyer or seller, the price paid for a property may or may not have any relation to the value that might be ascribed to that property by others.

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REAL ESTATE

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an identified parcel or tract of land, including improvements,
if any

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REAL PROPERTY

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the interests, benefits, and rights inherent in the ownership of real estate.

Comment: In some jurisdictions, the terms real estate and real property have the same legal meaning. The separate definitions recognize the traditional distinction between the two concepts in appraisal theory.

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REPORT

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any communication, written or oral, of an appraisal, appraisal review, or appraisal consulting service that is transmitted to the client upon completion of an assignment

Comment: Most reports are written and most clients mandate written reports. Oral report requirements (see the Record Keeping section of the ETHICS RULE) are included to cover court testimony and other oral ommunications of an appraisal, appraisal review, or appraisal consulting service

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SCOPE OF WORK

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the type and extent of research and analyses in an assignment

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SIGNATURE

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personalized evidence indicating authentication of the work performed by the appraiser and the acceptance of the responsibility for content, analyses, and the conclusions in the report.

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VALUATION SERVICES

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services pertaining to aspects of property value.

Comment: Valuation services pertain to all aspects of property value and include services performed both by appraisers and by others

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VALUE

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the monetary relationship between properties and those who buy, sell, or use those properties.

Comment: Value expresses an economic concept. As such, it is never a fact but always an opinion of the worth of a property at a given time in accordance with a specific definition of value. In appraisal practice, value must always be qualified - for example, market value, liquidation value, or investment value.

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WORKFILE

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documentation necessary to support an appraiser’s analyses, opinions, and conclusions

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ADVOCACY

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representing the cause or interest of another.

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STANDARD

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a benchmark or set of criteria used to measure performance.

In the case of USPAP, there are 10 standards measuring ethics and competency when developing and/or reporting an appraisal, appraisal review, or appraisal consulting assignment.

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STANDARDS RULE

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Each Standard in USPAP is comprised of Standards Rules that identify the requirements and guidance that apply to that Standard

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STATEMENTS ON APPRAISAL STANDARDS
(STATEMENTS)

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are:
• authorized by the by-laws of The Appraisal Foundation;
• specifically for the purposes of clarification, interpretation, explanation, or elaboration of USPAP;
• have the full weight of a Standards Rule; and
• can be adopted by the Appraisal Standards Board only after exposure and comment.