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USPAP 2018-2019 Edition

© The Appraisal Foundation

36

STANDARD 5

(f) identify the characteristics of the market that are relevant to the purpose and intended use of the mass

appraisal including:

(i)

location of the market area;

(ii)

physical, legal, and economic attributes;

(iii) time frame of market activity; and

(iv) property interests reflected in the market;

(g) in appraising real property or personal property:

(i)

identify the appropriate market area and time frame relative to the property being valued;

(ii)

when the subject is real property, identify and consider any personal property, trade fixtures, or

intangibles that are not real property but are included in the appraisal;

(iii) when the subject is personal property, identify and consider any real property or intangibles that

are not personal property but are included in the appraisal;

(iv) identify known easements, restrictions, encumbrances, leases, reservations, covenants, contracts,

declarations, special assessments, ordinances, or other items of similar nature; and

(v)

identify and analyze whether an appraised fractional interest, physical segment or partial holding

contributes pro rata to the value of the whole;

Comment: The above requirements do not obligate the appraiser to value the whole when the subject

of the appraisal is a fractional interest, physical segment, or a partial holding. However, if the value

of the whole is not identified

,

the appraisal must clearly reflect that the value of the property being

appraised cannot be used to develop the value opinion of the whole by mathematical extension.

(h) analyze the relevant economic conditions at the time of the valuation, including market acceptability of

the property and supply, demand, scarcity, or rarity;

(i) identify any extraordinary assumptions and any hypothetical conditions necessary in the assignment; and

Comment: An extraordinary assumption may be used in an assignment only if:

• it is required to properly develop credible opinions and conclusions;

• the appraiser has a reasonable basis for the extraordinary assumption;

• use of the extraordinary assumption results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions.

A hypothetical condition may be used in an assignment only if:

• use of the hypothetical condition is clearly required for legal purposes, for purposes of reasonable

analysis, or for purposes of comparison;

• use of the hypothetical condition results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for hypothetical conditions.

(j) determine the scope of work necessary to produce credible assignment results in accordance with the

SCOPE OF WORK RULE.

59

59 See Advisory Opinion 28,

Scope of Work Decision, Performance, and Disclosure,

and Advisory Opinion 29,

An Acceptable Scope of Work.

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