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FEES
Because he works independently, Mr. Francis' fees are commonly slightly less than those of
the large appraisal and accounting firms. Further, if the assignment calls for a formal
appraisal report, fees can also be further reduced by judicious choice of an appropriate
appraisal type (please see the explanation provided below). More importantly, a client
knows that Mr. Francis has done the work himself rather than passing it down to a junior
associate.
TYPES OF APPRAISALS DEFINED
The Uniform Standards of Professional Practice ("USPAP") published by the Appraisal
Standards Board of The Appraisal Foundation, Washington, DC, establishes certain rules and
guidelines for developing and reporting appraisals. Certain definitions emanating from
these rules and guidelines are as follows:
"Complete" or "Limited"
Under Standard Rule 1, in developing a real property appraisal (i.e. arriving at
the estimated value), an appraiser must meet certain absolute requirements such as being
aware of, understand, and correctly employ those recognized methods and techniques that are
necessary to produce a credible appraisal. Beyond meeting these absolute requirements,
an appraiser is also expected to follow certain additional "guidelines" in development
of his value conclusion but these he can depart from under certain circumstances.
An example of such a guideline is that an appraiser should, before appraising a proposed
project, have reviewed project plans and specifications for it.
Because seeing plans and specs is a guideline and not an absolute requirement, under
USPAP the appraiser can appraiser the property without seeing them under certain conditions.
Specifically, USPAP allows "departure" from "guidelines" but only
if the appraiser has: A) determined that the departure will not lead to a misleading
or confusing report, B) has advised the client that the departure will lead to something other
than what is required by the specific guideline and that the report will clearly identify and
explain the departure and C) the client agrees that the performance of a "limited appraisal"
is appropriate.
If the departure provision is not invoked, the appraisal is said to be a "Complete
Appraisal". When the departure provision is invoked, the appraisal is said to be
a "Limited Appraisal."
"Self-Contained", "Summary", or "Restricted Use"
Under Standard Rule 2 all appraisals must be reported in one of three formats:
1) Self-contained Appraisal Report,
2) Summary Appraisal Report or
3) Restricted Use Appraisal Report.
USPAP states that:"the essential differences among these three options are in the use and
application of the terms "describe", "summarize" and "state". "Describe" is used to connote
a comprehensive level of detail in the presentation of information. "Summarize" is used
to connote a more concise presentation of information. "State" is used to connote the
minimal presentation of information."
The aim of this provision is to insure that all appraisals contain sufficient information
to enable the person(s) who are the intended user(s) to understand them. For example, a
report for a person lacking a broad based familiarity with real estate may require a
self-contained report, a real estate lender may require a summary report and a person
highly familiar with a particular real estate market may only need a restricted report.
Under USPAP an appraisal may not be reported in the restricted use format if there are
intended users of the report other than the client himself.
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