The nation’s largest professional association of real estate appraisers invited valuation professionals to provide additional input on the organization’s proposed standards of valuation practice, one of the Appraisal Institute’s three previously announced major strategic initiatives.
Seeking additional comments from valuation professionals, the Appraisal Institute board of directors has directed distribution of second exposure drafts of the following documents:
►Proposed Appraisal Institute Standards of Valuation Practice; and
►Proposed Appraisal Institute Code of Professional Ethics.
Comments on the exposure drafts should be emailed by May 4 to [email protected]
“The Board is very excited about the potential impact these standards will have on the valuation profession and is grateful to those who have provided valuable feedback,” said Appraisal Institute President Ken P. Wilson, MAI, SRA.
Initial exposure drafts of these documents were distributed last December. The Appraisal Institute’s Professional Standards and Guidance Committee subsequently reviewed and considered the comments received for the initial exposure drafts and worked on potential improvements and clarifications.
In its efforts to meet the Board’s directive and to improve upon the first exposure drafts of the SVP, the committee focused on the following major objectives:
1. Considering comments received and making revisions as appropriate;
2. Removing ethical requirements and methodology so that the SVP contains only what truly constitute standards (ethical requirements are covered in the Code of Professional Ethics and methodology is covered in the body of knowledge.);
3. Making the SVP applicable to any asset type (e.g., personal property, intangibles, real property);
4. Defining in a clear and consistent manner those terms that have specific meaning in the SVP, but otherwise using common terms; and
5. Making SVP as self-explanatory as possible (e.g., reducing the need for elaboration on the standards, such as through comments).
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.
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 SVP is adopted, Appraisal Institute Designated members, Candidates for Designation and Practicing Affiliates would be required to comply with either:
►The Standards of Valuation Practice, promulgated by 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.