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USPAP 2018-2019 Edition

© The Appraisal Foundation

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DEFINITIONS

Physical characteristics are not assignment results.

BIAS:

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

.

BUSINESS ENTERPRISE:

an entity pursuing an economic activity.

BUSINESS EQUITY:

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).

CLIENT:

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.

CONFIDENTIAL INFORMATION:

information that is either:

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• 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.

5

COST:

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

Comment:

Cost

is either a fact or an estimate of fact.

CREDIBLE:

worthy of belief.

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

necessary for the intended use.

EXPOSURE TIME

: 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.

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Comment: Exposure time is a retrospective opinion based on an analysis of past events assuming a

competitive and open market.

EXTRAORDINARY ASSUMPTION:

an assignment-specific assumption as of the effective date regarding uncertain

information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.

Comment: Uncertain information might include physical, legal, or economic characteristics of the subject

property; or conditions external to the property, such as market conditions or trends; or the integrity of data

used in an analysis.

FEASIBILITY ANALYSIS:

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

HYPOTHETICAL CONDITION:

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.

4

See Confidentiality section of the ETHICS RULE.

5 For example, pursuant to the passage of the Gramm-Leach-Bliley Act in November 1999, some public agencies have adopted privacy

regulations that affect appraisers. The Federal Trade Commission (FTC) issued two rules. The first rule (16 CFR 313) focuses on the

protection of ”non-public personal information” provided by consumers to those involved in financial activities “found to be closely related

to banking or usual in connection with the transaction of banking.” These activities include “appraising real or personal property.” See GLB-

Privacy. The second rule (16 CFR 314) requires appraisers to safeguard customer non-public personal information. See GLB-Safeguards-

Rule. Significant liability exists for appraisers should they fail to comply with these FTC rules.

6 See Advisory Opinion 35,

Reasonable Exposure Time in Real and Personal Property Opinions of Value

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