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USPAP 2018-2019 Edition

© The Appraisal Foundation

46

STANDARD 7

• 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.

(

g) identify any hypothetical conditions necessary in the assignment; and

Comment: 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.

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

SCOPE OF WORK RULE.

74

STANDARD RULE 7-3

In developing a personal property appraisal, when necessary for credible assignment results, an appraiser

must:

(a) analyze the property’s current use and alternative uses as relevant to the type and definition of value and

intended use of the appraisal;

Comment: In the context of personal property, value can be a function of the choice of the appropriate

market or, in some cases, market level for the type of item, the type and definition of value, and the intended

use of the appraisal.

The appraiser must consider the various uses of the property when viable alternative uses exist and when

those alternative uses may result in a different value.

(b) define and analyze the appropriate market consistent with the type and definition of value; and

Comment: The appraiser must recognize that there are distinct levels of trade (measureable marketplaces)

and each may generate its own data. For example, a property may have a different value at a wholesale level

of trade, retail level of trade, or under various auction conditions. Therefore, the appraiser must analyze the

subject property within the correct market context.

(c) analyze the relevant economic conditions that exist on the effective date of the valuation, including

market acceptability of the property and supply, demand, scarcity or rarity.

STANDARDS RULE 7-4

In developing a personal property appraisal, an appraiser must collect, verify, and analyze all information

necessary for credible assignment results.

(a) When a sales comparison approach is necessary for credible assignment results, an appraiser must

analyze such comparable sales data as are available to indicate a value conclusion.

(b) When a cost approach is necessary for credible assignment results, an appraiser must:

(i)

analyze such comparable cost data as are available to estimate the cost new of the property; and

(ii)

analyze such comparable data as are available to estimate the difference between cost new and

the present worth of the property (depreciation).

74 See Advisory Opinion 28,

Scope of Work Decision, Performance, and Disclosure

, and Advisory Opinion 29,

An Acceptable Scope of Work.

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