USPAP

USPAP, the Uniform Standards of Professional Appraisal Practice, is the "long arm of the law" in regards to appraisers. USPAP was developed in 1985 when a collection of nine appraisal groups gathered together to form an Ad Hoc Committee on Uniform Standards of Professional Appraisals Practice. These very diverse groups included:

• The Appraisal Institute
• American Society of Farm Managers and Rural Appraisers
• Appraisal Institute of Canada
• International Association of Assessing Officers
• International Right of Way Association
• National Association of Independent Fee Appraisers
• National Society of Real Estate Appraisers
• Societ of Real Estate Appraisers

Since their first publishing in 1987, USPAP has been interpreted and amended by the Appraisal Standards Board of the Appraisal Foundation.

FIRREA, the Financial Instituions Reform, Recovery and Enforcement Act, was developed in 1989 to help correct the dramatic failures of the Savings and Loan Institutions in the late 1980's. During this time, there was no professional licensure needed to become an appraiser. This lack of criterion caused turmoil in the mortgage industry (which, at the time, was dominated by the S&L's) and caused a number of bankruptcies & closures of those lending institutions. Congress stepped in and developed FIRREA, along with the FDIC (Federal Deposition Insurance Corporation), to ensure that all "federally related real estate appraisals" be completed by appraisers who were licensed or certified by the state in which the property was located.

Through this information, it is important to note a number of facts:

• All Star Appraisals, Inc. appraisers are, at a minimum, licensed in the state of Delaware.
• All forms prepared and submitted by Star Appraisals, Inc. are in compliance with USPAP, including the statement of the purpose of the appraisal and the intended user(s).
• A "FIRREA statement" accompanies all appraisals and is signed by the appraiser (and appraisals trainee, if used). This is to ensure compliance with the federally mandated FIRREA legislation, as described above.

Some Myths and Realities About
Real Estate Appraisals and Appraisers

Myth: Assessed value should equate to market value.
Reality: While most states support the concept that assessed value approximate estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.

Myth: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.

Myth: Market value should approximate replacement cost.
Reality: Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.

Myth: Appraisers use a formula, such as a specific price per square foot, to figure out the value of a home.
Reality: Appraisers make a detailed analysis of all factors pertaining to the value of a home including its location, condition, size, proximity to facilities and recent sale prices of comparable properties.

Myth: In a robust economy - when the sales prices of homes in a given area are reported to be rising by a particular percentage - the value of individual properties in the area can be expected to appreciate by that same percentage.
Reality: Value appreciation of a specific property must be determined on an individualized basis, factoring in data on comparable properties and other relevant considerations. This is true in good times as well as bad.

Myth: You generally can tell what a property is worth simply by looking at the outside.
Reality: Property value is determined by a number of factors, including location, condition, improvements, amenities, and market trends.

Myth: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.
Reality: The appraisal is, in fact, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers must be given a copy of the appraisal report, upon written request, under the Equal Credit Opportunity Act.

Myth: Consumers need not be concerned with what is in the appraisal document so long as it satisfies the needs of their lending institution.
Reality: Only if consumers read a copy of their appraisal can they double-check its accuracy and question the result. Also, it makes a valuable record for future reference, containing useful and often-revealing information - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.

Myth: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.
Reality: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.

Myth: An Appraisal is the same as a home inspection.
Reality: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the condition of the home and its major components and reports these findings.