The nation’s largest professional association of real estate appraisers unveiled proposed standards of valuation practice, one of the Appraisal Institute’s three previously announced major strategic initiatives that have the potential to fundamentally reshape the global valuation profession.
Seeking comments from valuation professionals, the Appraisal Institute Board of Directors has directed distribution of Exposure Drafts of the following documents:
►Proposed Preamble to Appraisal Institute Standards of Professional Appraisal Practice;
►Proposed Appraisal Institute Standards of Valuation Practice; and
►Proposed Appraisal Institute Code of Professional Ethics.
Comments on the Exposure Drafts should be emailed by Jan. 12, 2014, to [email protected]
“The Board believes that such standards should establish a high level of professional practice, engender public trust, enable valuers and the public to better understand the valuation standards and facilitate the growth and advancement of the valuation profession,” said Appraisal Institute President Richard L. Borges II, MAI, SRA.
The Appraisal Institute is the historic leader in establishing standards for the valuation profession. The Appraisal Institute’s two predecessor organizations, which unified in 1991, were among the first to establish standards for the valuation profession; the American Institute of Real Estate Appraisers created standards in 1932 and the Society of Real Estate Appraisers did so in 1936. AIREA and the Society regularly revised and strengthened their Standards over the decades that followed. The Appraisal Institute derived the proposed Standards of Valuation Practice from the 1985 AIREA Standards of Professional Practice.
The proposed Standards of Valuation Practice:
►Could be used as an alternative to the Uniform Standards of Professional Appraisal Practice or the International Valuation Standards when the use of USPAP or IVS is not required and the use of the SVP would be appropriate;
►Would serve as an alternative set of standards that could be used, not an additional set of required standards; and
►Would not supplant USPAP or other national standards.
“The Board recognized that where existing standards are not already required or do not apply, valuers would benefit from high quality, straightforward, principle-based standards. The Board also concluded that such standards could help valuers better meet the evolving needs of clients and facilitate the variety of work that clients’ desire and that valuers now perform,” Borges said.
State laws and regulations require that most valuers in the United States comply with USPAP in much or all of their valuation practices. For example, state licensed and certified valuers in “mandatory” states must comply with USPAP in their practices unless they are performing an exempted service. State licensed valuers in “voluntary” states must comply with USPAP in federally related lending transactions, at a minimum. Sometimes, however, valuers in the United States can, in addition to or as an alternative, comply with other standards. One example of such standards is the Uniform Appraisal Standards for Federal Land Acquisition (the “Yellow Book”).
An example of a situation where the proposed Standards of Valuation Practice could be used is in an assignment in a non-mandatory state that does not involve a federally related transaction (e.g., valuation for financial reporting, certain litigation related assignments) and where USPAP is not otherwise required. The valuer would identify the Standards used in his or her engagement letter and report.
If the proposed Standards of Valuation Practice are adopted, Appraisal Institute Designated members, Candidates for Designation and Practicing Affiliates would be required to comply with either:
►The Standards of Valuation Practice, promulgated the Appraisal Institute, and the Certification Standard of the Appraisal Institute; or
►Applicable national or international standards, and the Certification Standard of the Appraisal Institute.