Ask Henry


Carbon Monoxide Detectors


In California, there is a state law that says all homes must have Carbon Monoxide Detectors. My questions is: As part of USPAP, do we need to certify that there is a working detector in each home? If so, do we make the appraisal “subject to” their installation if not present when inspected?

Thank you,
Mike Bucchianeri

Dear Mike,

I am not familiar with this California law. Normally appraisers are not required to test each alarm. However, to be safe many appraisers do test them just to be safe. Other take the position this is something that should be left up the home inspectors. At a minimum I think what I would do is make sure each required room has a detector and if non are installed, not report that in your appraisal.


Ask Henry

Evaluations vs Appraisals
Dear Henry,
I was recently contacted by a bank I have done appraisal reports for the past 12 years – mostly 1004 reports for secondary markets, some 2055 reports for in-house lending – their e-mail asked what we would charge to do some “evaluations for renewal loans.” To me, the word “evaluation” is a play on words and the same as an appraisal.

After the last few years of being questioned on every blank on the form, griding listings, extra comps etc. – it is a shock to the system to be asked to do an evaluation for which we are supposed to make up the form. I have heard of some appraisers in a nearby town and competing appraisers in my town who are doing some evaluations with a greenhorn trainee.

Is this acceptable practice with the rules we live under?

Wendell Sears

Dear Wendell,
The USPAP defines an appraisal as follows:

"APPRAISAL: (noun) the act or process of developing an opinion of value; an opinion of value. adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.

Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).....The use of other nomenclature for an appraisal, appraisal review, or appraisal consulting assignment (e.g., analysis, counseling, evaluation, study, submission, or valuation) does not exempt an appraiser from adherence to the Uniform Standards of Professional Appraisal Practice."

Therefore, it seems clear to me that whenever you provide an opinion of value you must make an appraisal that conforms with the all the USPAP requirements for making an appraisal. However, you do have a choice as to what reporting form to use. If the lender / client is going to be the only user of the report, then you may chose to use a Restricted Appraisal Report, which requires a lot less information. However, this does not excuse you from doing everything needed to make an appraisal.

I have been told that a few states allow "evaluations" that do not meet the USPAP requirements for an appraisal. Since enforcement of the USPAP is up to the individual state, and not the Appraisal Foundation, appraisers in those states may chose to make Evaluations. You should call the Appraisal Commission in your state and ask them the same question you are asking me. I’d be curious to hear their response!


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Ask Henry

Actual Age of Renovation
Hi Mr. Harrison,
I inspected a home in one of the 5 Boroughs of NYC. The improvements to the property include a two family large structure that appeared to be brand new construction. I spoke to the developer who stated that in the construction process, they had left part of the old foundation. In other words, the old structure had been completely demolished, aside for part of the original foundation walls, and the new existing structure was put up in its place. This was done for tax purposes, as the NY tax dept considers this a 'renovation' not a new construction, and therefore, the taxes would not be drastically increased. The old structure was built in 1920. The new structure in 2012. My question is, if the entire new structure (above grade) and part of the foundation were built in 2012 and only a small amount of the foundation was built in 1920, What is the actual age of the structure?

Thank you for taking time to answer my question!
Nechama Arnold

Dear Nechama,
Since this is important information, the USPAP says you must provide it somewhere in your appraisal or in on addenda form. You actually have answered your own question: “The part of the foundation is 90 years old and the house is (new or less then 1 year)” is a perfectly adequate response. What stumps many appraisers is how to get this information on to the form being used. This depends on which form fill program you use. Depending upon the program, you might put into the box "90/1”, or “*”, or "see comments”.

If your form fill program does not let you indicate that an answer is incomplete, you should send a complaint to your software provider. If you use an addenda, which is often the best way to provide any special information, it is a good idea to put a statement on the first page of the form such as “Important information about this appraisal is included in the addenda.” This prevents anyone from removing the addenda from the report.

There is no number that will accurately reflect the actual age when different parts of the building were constructed at different times. However, you should reflect your estimate of the effective age in a single number.

You also might want to make a comment in your appraisal as to why this was done as it does effect the value of the property.


Ask Henry

Cost Approach for Mortgage Transactions
Dear Henry,
Have you run across many lenders requesting the Cost Approach for insurance values when the intended use is for mortgage transaction? They are wanting the CA for properties where the result is not a credible result (very old homes).

It even states in the certification that the intended use is for mortgage financing, not insurance.

How would you handle this?
Tammy VanScoy
Office Manager
Daugherty Appraisers, Inc.

Dear Tammy,
I find nothing in the USPAP that prevents you from doing what the client requests as part of their scope of work. Some appraisers disagree with this opinion. They seem to base their opinion on the statement on most Fannie Ma/Freddie Mac forms that says: “INTENDED USE: The intended use of this appraisal report if for the lender/client to evaluate the property that is the subject of this appraisal for a mortgage finance transaction.” From the sound of your question it seems to me that this is what the lender is trying to do. The lender wants to be sure the property owner carries adequate insurance to protect the lender.

The only thing I could find in the current USPAP are Frequently Asked questions #174 and #292. They to me, support my position.



New USPAP Frequently Asked Questions & Answers
Effective Date: January 1st, 2012 - December 31st, 2013

If you look carefully at the 2012-2013 Uniform Standards of Appraisal Practice you find a separate section of 159 pages answering 321 questions. It reminds me of when I walk into an attorney’s office and looked at their book shelves. The number of books that interpret the Connecticut statutes were far greater then the number of books that contain the statutes.

When I receive an “Ask Henry” question the first thing I do is look up the subject it covers in this FAQ section of the current USPAP. Often I am able to use what I find as the basis for my answer. (If you have the electronic version of the USPAP it is easy to look for a subject by using the search function).

After publishing the current USPAP (2012-2013), the Appraisal Foundation continues to publish answers to frequently asked questions. You can see these questions and all the 2011 questions at (On the right side of their home page click on the “Appraisal Standards Board (ASB) – USPAP Q&As” tab which will take you to eight new 2012 questions and seven 2011 questions.)

Below is a list of the 2012 USPAP Questions and my summary of these questions and answers:


Ask Henry

Extensive Bank Work - USPAP Violation?
Hi Henry,
I have a question: If an appraiser works for a bank and reviews a property by another appraiser, then does an appraisal on the same property, and is an expert witness in court for the bank -- is that legal or illegal? Does that violate USPAP?

Please advise.

Thank you,

Dear Christine,
There is nothing in the USPAP that directly addresses this question. I am unaware of anything that would make this illegal. xThe USPAP does permit an appraiser to appraise the same property for more than one client. I think this would apply in your situation too. However, the USPAP does have rules about confidentially which would prohibit you from using any confidential information that appeared in the appraisal you reviewed for the bank.

Even so , I would not do it as it sounds to me like you would be looking for trouble. Trying to explain to a judge why you did this, which appears to be a conflict by giving as your reason that it is O.K. because of the USPAP is not a position I would like to be in. You should always think twice about appraising the same property for two different clients unless you feel that one will never have anything to do with the other. I don't even like being in the position of asking the first client for permission to do an appraisal for a second. You maybe bumping into the Confidentially rules by revealing to one client that someone else in interested in their property.


Ask Henry

Dear Henry,
I am appraising a unique property. It is located in an area that has very few duplex's. There are no resent sales in the subject's city. I know I can go to a similar neighborhood to get comps however the neighborhoods are in a different city with different tax base. This area of South Florida has many different cities within a 10 mile area. How far can I go from the subject property and still be considered a comparable neighborhood?

Thank You for you help,

Dear E.,
There are no USPAP requirements that limit the distance you can go to find the best comparable sales. Actually, it is just the opposite because it is a violation of the USPAP to limit your search for the best comparable sales based on instructions from the client. However, it is O.K. for a client to ask you to explain why you needed to go some unusual distance to find the most comparable sales.

Sometimes the market area in which the best comparable sales are located is very limited because it is near a university, hospital, or public transportation, etc. An opposite example is when a typical wealthy buyer, who is working in New York City, considers buying a mansion in Long Island NY, Morristown NJ or Greenwich CT, then you may end up looking for comparable sales in three different states.


Breaking News

Appraisal Qualification Board Q & A Vol.4, No.1
Dear Henry,
I am now considering up grading from a Certified Residential Appraiser to General Certified Appraiser. I get different answers from different people on several of the requirements. For example some people tell me my upgrade work must be supervised by a General Certified Appraisers. Others tell me it is unnecessary. My state appraisal board says it depends what is required by the Appraisal Foundation. I have tried to real all their voluminous requirement but can not find a definitive answer to the question. What do you think.

Madison, WS

Dear OJ
You are correct when you say there is no direct definitive answer to this question in the USPAP. There is an answer in the just released Appraisal Qualification Board Q & A Vol.4, No.1 dated June 2012.

This is a summary of what it says:

1. Some states have specific requirements that cover this situation. Therefore the first then than any appraiser who is considering getting a Residential or General Certification is to check with your state to see what their specific requirements are. The simplest way to do this is to send them a letter asking what if any requirement you state has. I always prefer a letter to a verbal request as if some time in the future what you have done is questioned you can fall back on the letter to explain what you did or did not do. The only problem with this communication method is that some states take a very, very long time to answer appraiser inquiry letters. If this apply to you state you should make a verbal inquiry and when you get someone who will talk to you ask them if they have anything in writing that they can send to you.

The entire AQB Q & A Vol.4, No.1, June 2012 is available to download by clicking here.

Ask Henry

Dear H2,

Why are some appraisers claiming that the UAD fails to meet USPAP?

Robert O'Brien

Dear Robert,

So far no one has sent me a valid reason why complying with the UAD would require an appraiser to make an appraisal that does not meet the requirements of the USPAP. I do not know who has been making these claims, but I don't think they are valid.


Ask Henry

USPAP vs FHA Requirements
Hi Henry,
I completed an appraisal for Lender A. Then, Lender B called and said Lender A is OK with them using my report. Now I've been notified that Lender B's underwriter wants clarification on a couple of items, such as right of way and community water.

They don’t want client name changed. Can I do this and stay compliant with USPAP? Thank you in advance for your advice.

Carlene S Mathison
Cornerstone Appraisal

P.S. I did check with Lender A and was told it is okay to do this "because it’s an FHA assignment & FHA has mandated portability."

Dear Carlene,
You are correct the FHA does permit the original lender to transfer the appraisal to a second lender under certain circumstances. Here is a summary of this ruling:

"Appraisal Transfer and Change of Client Name in Appraisal Report"

In cases where a borrower has switched lenders, the first lender must, at the borrower's request, transfer the case to the second lender. FHA does not require that the client name on the appraisal be changed when it is transferred to another lender.

In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. To effect a client name change, the second lender and the original appraiser may engage in a new appraisal assignment wherein the scope of work is limited to the client name change. A new client name should include the name of the client (lender) and HUD.

There are a bunch of other requirements the lenders must comply with.

It is still my opinion that you are not required to do anything and in fact most anything you do will be treated as a new appraisal and you must comply with the USPAP requirements for making a new appraisal for which you should be paid.

I think you have a choice. Do nothing or tell lender B if they want you to do anything it will require you to make a new appraisal and you expect to be paid for it.


Ask Henry

Final Utilities Inspection
Dear Henry
I'm a huge fan of your articles and Q and A for a long time.

I’ve been asked by a lender to do a "final inspection" on a HUD resale for just the utilities hookup. The original appraisal was done a few months ago by a different appraiser for a different client. The new lender (my client) is asking specifically that only the utilities be checked. Can I do that? And what form would I use (all the standard forms imply that the appraiser doing the final inspection is the one that did the original appraisal). Any suggestions on what form might protect me from being tied to the original appraisal?

Paul Ryan

Dear Paul,
It does not make any difference what form you use (or maybe just a letter) as long as it is crystal clear that you are not making an appraisal or rendering any opinion as to what affect the connection of the utilities will have on the value of the property. If you give such an opinion, you are making an appraisal and must conform to all the USPAP requirements for making an appraisal.

Thanks for your kind comments.



Not too Late to Comment...
The ASB is currently considering changes for the 2014-15 edition of USPAP. All interested parties are encouraged to comment in writing to the ASB before their upcoming meeting in Savannah, GA on February 10th, 2012.

The actual deadline for written comments is extended to March 12th, 2012. Respondents should be assured that each member of the ASB will thoroughly read and consider all comments. Comments are also invited at the ASB public meeting on Feb.10th in Savannah, Georgia.

Written comments on this document can be submitted by mail, email or FAX.

Snail mail address:

Appraisal Standards Board
The Appraisal Foundation
1155 15th Street, NW, Suite 1111
Washington, DC 20005

Fax: (202) 347-7727

To review the current proposed changes, click here: USPAP COMMENT


2012-13 Edition of USPAP Released
Effective Date: January 1st, 2012 - December 31st, 2013

The Appraisal Foundation, a congressionally-authorized nonprofit organization dedicated to the advancement of professional valuation, announced that the 2012-13 edition of the Uniform Standards of Professional Appraisal Practice (USPAP) has been released. USPAP is the generally accepted standards of practice for the appraisal profession in the USA.
The 2012-13 edition of USPAP will be valid for two years, from January 1, 2012 through December 31, 2013. As with the prior edition, the new edition
includes the standards of professional practice for all appraisal disciplines as well as guidance from the Appraisal Standards Board (ASB) in the form of USPAP Advisory Opinions and USPAP Frequently Asked Questions (FAQs).  
Changes to the document include:
• Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;
• Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE; 
• Revisions to Advisory Opinion 21, USPAP Compliance; and, 


Copies of the 2012-13 edition of USPAP are now available for purchase from the Appraisal Foundation Store at The 2012-13 edition of USPAP is available in printed spiral bound copy for $75 or as an electronic PDF download for $60.
In the coming weeks, USPAP will also be available in Flipbook format and for eReaders including the iPad, Kindle, Nook and the Sony Reader.

Ask Henry

Remaining Economic Life

Hello Henry,

I have an underwriter saying that the economic life needs to be included on all reports, even though the URAR form 1004 says it is needed for HUD/VA only. Have I missed something in this regard? Thanks in advance for your time.

Dianne Mendel

Dear Dianne,

The USPAP states that for every appraisal, the appraiser and the lender client must have a scope of work dialogue. The designers of the URAR 1004 have incorporated some of their scope of work requirements into the URAR. What the URAR is telling you is that Fannie Mae and Freddie Mac do not require that you estimate the remaining economic life while the HUD/VA does require it. However, if the appraiser feels it is necessary in order to make a credible appraisal (which is required by the USPAP) it should be included. What the underwriter is saying to you is that for the lender/client they represent, it is required, which is their right.


Ask Henry

New Lender, Old Appraisal

Hi Henry,
I did an FHA Appraisal for Lender A back in July. I was paid and the file was closed. I was not able to inspect the attic at the time, as the attic entrance was sealed off. This was noted in the appraisal report. Last week (3 months after my previous inspection and report) Mortgage Company B called and said they have my appraisal, the loan did not close with Lender A and they have a new lender who will accept my appraisal. However, they need me to go back to the property and inspect the attic for a fee. I refused as I completed the original assignment for Lender A and the file is closed.

Mortgage Company B and the homeowner keep calling me to comply and do the attic inspection. I called Lender A and they said "do not inspect, this is a USPAP violation and changes the scope of work." I want to be done with this appraisal and Mortgage Company B. My questions is whether this is indeed a USPAP violation? What is the best way to handle this with Mortgage Company B and the homeowner, who both keep calling me?

Thanks for your time,

Dear Rob,

The USPAP is quite clear that when the client changes, it requires a new scope of work dialogue and a new appraisal. There is nothing that requires you to make a new appraisal for the new client but why not do so? However, there is also nothing to stop you from making the inspection as long as it does not become part of your original appraisal report. For a new appraisal, you are permitted to use any of the data in the old appraisal as long as it was not provided to you on a confidential basis. It should be easy to update the physical description of the property, the neighborhood data, etc., and make the attic inspection which will be part of the new scope of work requirement. I suggest offering to make a new appraisal for Mortgage Company B, taking into consideration that much of data will already be available to you. You'll make the homeowner happy, and may even develop a new client.



Check out the
for 2012-2013

For many appraisers, a video presentation will be the least painful way to learn about the forthcoming USPAP regulations.

The Appraisal Foundation has announced the release of a free video on its website entitled "A Preview of Changes to the 2012-13 Uniform Standards of Professional Appraisal Practice (USPAP)". It is ready now.

The video is just 23 minutes in length, and features an interview with the 2011 Chair and Vice Chair of the Appraisal Standards Board (ASB), J. Carl Schultz, Jr. and Barry Shea, respectively. A PowerPoint presentation is available for simultaneous viewing as well.

USPAP changes discussed in this video include:

1) Revisions to DEFINITIONS of “Client,” “Extraordinary Assumptions,” and “Hypothetical Condition,” as well as a new definition of “Exposure Time”;

2) Creation of a new RECORD KEEPING RULE and related edits to the Conduct Section of the ETHICS RULE;

3) Revisions to Advisory Opinion 21, USPAP Compliance; and,


Mock Administrative Hearing and an audio webinar on Fair Value Measures are also available online from the AF's eLibrary.The Appraisal Foundation has plans to expand its eLibrary later this year with a videotaped session on Green Buildings and their Valuation, coming in late 2011.

Click here now for the

Any questions? Please Contact the AF directly:
Paula Douglas Seidel, Executive Administrator

Ask Henry

New Assignment, Prior Property

Hi Henry, 

You do a fantastic job and are THE SOURCE for appraisal questions and dilemmas. I have one of those dilemmas now!
I have a client who is asking me to take a new assignment on an appraisal that is over a year old and that I did for another lender. Obviously, the new client wants their name on the appraisal, but they do not want a current value. May I take the new assignment? 

Thanks in advance,
Mary Buckman, SRA
Green Bay, WI

Dear Mary,

Thanks for the kind words.  

The effective date of the appraisal is determined at the scope of work dialogue between the appraiser and the client. Many appraisals are made with an effective date at some time in the past. Whatever the effective date of the appraisal is, that becomes the date that you use for the condition of the property and the market at that time. The only USPAP restriction is that you cannot use any confidential information you received from the original client without their permission.


Ask Henry

Disposition Value

Hello Henry,

I have a client who's requesting a market value and a disposition value on every commercial report. If you were asked to do that, what steps would you take and how would you go about coming up with your disposition value? Thanks for taking the time to answer my question.

Robert Jones
Certified General Real Property Appraiser

Dear Robert,

As part of the "Scope of Work" dialogue that the USPAP requires you to have with a client before you make an appraisal, you have to agree regarding what definition or definitions of value are going to be used. This is not a problem when the value in question is market value as its definition was blessed by the US government as part of the FIRREA act. However, when a special value definition is needed, it is usually supplied by the client (ERC is a good example).

I think you are looking for trouble if you try to draft a custom definition of value. It might even be considered "practicing law without a license". My recommendation is that you suggest that the client have their attorney draft the definition they want you to use for disposition value.


Ask Henry

Cluster Homes Vs S.F.R.

Hi Mr Harrison,

I'm working on a cluster home attached on one side to another property. The two residences share a common wall, and the properties are very similar. My problem is that there are no other similar comps in the neighborhood; the last similar property was sold 3 years ago. Can I use another type of property as a comparable?

Thank you,
Al at Florida House Appraisals

Dear Al,

Getting good comparable sales is a perpetual problem for appraisers. There are no rules about where you can seek comparable sales information. It is up to the discretion of the appraiser. If a client tries to restrict where you can get comparables from you should either talk them out of the restriction or refuse the assignment, because if you accept this restriction there is a good possibility you will be making an appraisal that violates the USPAP. There are exceptions to this rule which are complex and would require limiting conditions, assumptions and possibly a custom definition of value.

The USPAP requires that you make a "credible appraisal". If you do not think there are sufficient comparable sales available that make it possible for you to do this, I recommend that you turn down the assignment.


Ask Henry

Tax Appeal Appraisal Fees

Dear Henry,
At one time, courses suggested appraising a property for the purpose of proving it was being assessed — and thus taxed — too high. If the result was a lowering of taxes, the agreed fee was often one year's tax saving. Can this still be done or have advocacy rules stopped this practice.


Dear Donald,
The Ethics Section (Management) of USPAP specifically prohibits an appraiser's fee being based on the outcome of the appraisal. Assessment appeals would be a great source of income to appraisers if they were allowed to do them with their fee based on the outcome of the appeal. Unfortunately, the USPAP is very clear that it is prohibited. Ironically, lawyers are permitted to be paid this way, and most often are.


Ask Henry

Scope of Work - Special Requirements

Dear H2,

I have a client that is asking for an enormous amount of data research for review assignments and they are very specific about the order in which these items are to be placed in the report. I am concerned about data mining from my reports but wanted to get your thoughts.

Some of the items that they are requesting are a 0-6 month CMA of all applicable sales in a marketing area and a 6-12 month CMA of all applicable sales in a marketing area. I am okay about providing some of these items but then they also want both the MLS sheets and County records of all of the sales from the CMA. In some neighborhoods, we may be talking upwards of 50 or more sales in both CMAs -- which then may add upwards of 200 additional pages to the report. They want each one on an individual page and labeled very specifically as to what they are, so the additional amount of work that is being asked for each Review Assignment is extensive.

Any thoughts on how I can appropriately address these additional requests?

Thank you.
Cathy Putegnat
Homestead Appraisals

Dear Cathy,

The USPAP requires that appraisals be reported in one of three different types of appraisal reports. Most residential appraisals are Summary Appraisal Reports but it sounds like from your question that your client may be asking for a Self Contained Appraisal Report in their scope of work requirements. The first step in the required scope of work dialogue between the appraiser and the client is to agree upon which type of report is required. The USPAP specifies the minimum that is required for each report type, but the client and the appraiser can agree on any additional material the lender/client requests.

I once did a 25 mile pipeline right-of-way "taking" appraisal where we were asked to provide information about every sale in the past 10 years that took place within a mile of the proposed right-of-way. It was a great assignment because our fee was in the six figures and the client agreed to pay half of it 'up front' so that we could pay for the additional appraisers used to do the extensive research. By the way, this client also had a standard format for reporting each sale. The only problem I can see here is whether you are going to be adequately paid for all of the extra work involved, assuming you are willing to do what they request.



Use of Distress Sales in Real Property Market Value Appraisals

A client has asked me to disregard any foreclosure, real estate owned (REO), or short sales when performing market value appraisal assignments. Is this an acceptable assignment condition?

No. USPAP does not specifically address which sales should or should not be considered in an appraisal assignment. However, in real property appraisal assignments, Standards Rule 1-4(a) requires:
When a sales comparison approach is necessary for credible results, an appraiser must analyze such comparable sales data as are available to indicate a value conclusion. (emphasis added)

So, the appraiser must determine what data is relevant. There are many appraisal assignments where, in order to achieve credible results, it is necessary to use “distress” (e.g., REO or Short Sales) properties as comparable sales. However, foreclosure sales, defined by
Black’s Law Dictionary as “the sale of mortgaged property, authorized by a court decree or a power-of-sale clause, to satisfy the debt” are seldom based on market expectations. When there is a glut of distress sales in the marketplace, and those properties are truly comparable to the subject, it would be misleading not to use them as part (or in some cases all) of the basis for a value conclusion. A client-imposed requirement to disregard data that may be relevant and necessary for credible assignment results would be an unacceptable assignment condition. (emphasis added)

To download the entire PDF, click here: USPAP Q & A

Ask Henry

2055 VS Full Appraisal

Dear Henry,

I work at a community bank and am new to appraisal review. We are getting very unclear information from our examiners as to what we need for a residential appraisal. Up until recently, they accepted a BPO (Broker Price Opinion) for a routine (yearly) value update on loans under $500,000. Now a different examiner states that BPOs are not acceptable, and requires that we get a full appraisal for everything with a mortgage balance over $250,000.
One examiner told us that all residential appraisals must be made according to USPAP. In trying to reduce our ridiculous costs in having to order a brand new appraisal for every residential annual value update, a few appraisers have submitted their reports on Form 2055 (basic drive-by). This form cannot meet USPAP in its brevity. Do you know if the OCC will accept a Form 2055 for a residential valuation update? And do you have any recommended websites where I can search for additional information on the uses of the various residential appraisal forms? 

Thank you in advance for your help,
Mary F Miron

Dear Mary,

There is nothing in the USPAP that specifies what type of appraisal report the appraiser must use. Therefore, this is something your institution must determine based on their needs and requirements. They must comply with all their regulators' requirements.  I sympathize with their dilemma. As far as your statement that an appraisal report on the Form 2055 "cannot meet USPAP requirements in its brevity", that's just not the case. An appraisal reported on the 2055 still must meet all USPAP requirements. The choice of the form does not dictate the comprehensiveness of the appraisal itself.


Ask Henry

Effective Age

Dear Mr. Harrison,

I recently did an exterior-only VA Liquidation Appraisal on a dwelling built in 1924. Normally we do a full appraisal on these properties, but the owner would not let me in. The dwelling had some obvious deferred maintenance, but it’s a brick dwelling and I anticipate that it will be around for many years yet. My estimated value was about $100,000. If the dwelling were nicely refurbished, it might command a value of about $150,000 in its neighborhood.

The VA review appraiser told me that since I did not gain entrance to the dwelling, I was required to use the actual age of 87 years as the effective age. (I used 12, which in looking back, I do think was too low.) Most appraisers I talk to seem to follow the old Marshall-Swift mindset of 60 years as the typical total economic life of a property. Would you give me your thoughts?

Gary Moyer

Dear Gary,

The effective age of a house depends mostly upon its design and condition. I have always believed that "benchmarks" are of little use in appraising, and this is a good example. I doubt the VA review appraiser has anything to back up his or her wrong opinion! If you render an opinion about a property you have not completely inspected you have to make some assumptions about what you did not see. The USPAP requires that you make a "credible" appraisal. In view of the circumstances, I suggest that you put this job behind you and move on.


Ask Henry

USPAP Compliance: Confidentiality

Hi Henry,

I was sent an email by an attorney's office, stating that he is the attorney for one of my clients. He attached an affidavit and requested that I sign and notarize it. Basically, the affidavit is asking that I swear to the value of a report that I had done in the past. Additionally, he asked for a copy of my curriculum vitae.

I replied in an email that he is not my client and as a licensed real estate appraiser, I'm bound by the Uniform Standards of Professional Appraisal Practice; therefore, I can't discuss any aspects of the report with him. He then left a voice message stating he "didn't understand" my email and to please call him. This person is a real estate attorney and also handles corporate law. I'm sure he understood my email. I replied to him in an additional email that he is not my client and I can't discuss any aspects of the report with him. The scope of work on this report was market value and in the limiting conditions it states: "the appraiser is not responsible for matters of a legal nature."

By the way, my client has not contacted me regarding this issue. Do you have any advice on how I should proceed if my client contacts me about signing the affidavit? I appreciate your time and any advice you may have for me. Thanks!

Nola Beehler

Dear Nola,

The USPAP restricts you from having any dialogue about your appraisal report with anyone except the lender/client who is identified in the report (with a few specific exceptions). In my opinion this includes even acknowledging that such a report exists. I believe the only acceptable answer when asked about an appraisal is to tell whoever asks you that they should contact the lender/client named in the report for further information. If the lender/client wants you to amend the report to include an additional user, it is a change of the scope of work, which requires a new appraisal report. You can comply with such a request -- and charge for your additional time.

In general, whenever you add any information about an appraisal report either in writing or verbally, it becomes part of the report. I would limit any affidavit I signed -- only at the request of the lender/client -- to a statement that you made the report and that the report speaks for itself. When pressed further, I recommend that you refuse to do anything without the advice of an attorney representing your interests, and ask the requesting party agree to pay for the cost of the attorney. Whenever a lender/client asks for additional services you have to decide if charging an additional fee is good business practice. Excessive accommodation may lead to regular requests for "extras", but in the current climate, keeping a good client may require this.


Ask Henry

Better Business Bureau Complaint

Dear Henry,

For the first time in my 26 years of appraising, a complaint regarding the quality of my work has been submitted to the Better Business Bureau. I am compelled to answer the complaint, which involves 2 different clients. My only concern is that my response will be on the webpage for everyone in the world to read. Will I be violating USPAP Standards on confidentiality to my clients? Please give me your thoughts.

Information withheld by request

Dear LJ:

There is nothing I know of that compels you to answer this complaint. However, if you decide to answer it, I recommend saying that the appraisal is your professional opinion, and that the confidentiality provisions of the USPAP prohibit your discussing the appraisal with anyone other than your client.




SAVE THE DATE: Friday, April 8, 2011 • 9:00am – 12:00pm

Grand Hyatt San Antonio 600 East Market Street San Antonio, TX 78205

Meeting Agenda: 

The Appraisal Standards Board (ASB) will meet in San Antonio in April to make its final consideration of revisions for the 2012-13 edition of USPAP. 

Based on the feedback from the Fourth Exposure Draft, the Board will expose its Fifth (and final) Exposure Draft for proposed changes for the 2012-13 edition of USPAP in mid-February, 2011. 

Written comments in response to the Fifth Exposure Draft will be accepted through April 1st, 2011. Oral comments will also be accepted at the April 8th public meeting. The Board plans to adopt revisions for the 2012-13 edition of USPAP at the April 8, 2011 public meeting. 

Please note that this meeting will be followed by a meeting of the State Regulator Advisory Group at 1:00 p.m., and these two meetings are at the Grand Hyatt Hotel; the AARO (Assoc. of Appraiser Regulatory Officials) Conference is being held at the Hotel Contessa at 306 West Market Street in San Antonio.

Your online registration will assure proper seating at the meeting.

Standards Administrator: Carrie Cadle
202-624-3058 |
Events/Meeting Registration

Ask Henry

What You See is What You Appraise

Dear Mr. Harrison,

I'm a residential appraiser in New York, primarily covering the five boroughs of New York City. I come across many homes that have upgraded kitchens and bathrooms, finished basements, finished attics and/or small extensions. Many of these upgrades are not filed with the City, and I've been getting requests from lenders asking if these are 'legal' upgrades or additions. I have spoken to the NYC Building Dept. and their response is almost always the same: they would need to send an inspector to the property to determine the legality of the upgrades (ast no work permits have been filed). I have two questions:

1) Say there are no work permits allowing for the upgrades that are already in place, can I still add value for the areas that were upgraded? Can I include the extra square footage, the finished attic space, etc., in the area above grade? And can I apply adjustments for kitchen remodeling or other upgrades if there were no work permits for the upgrades?

2) Is it my duty as an appraiser to notify the lender that there were no permits filed for the work?

Thank you for all the insight and help you provide! I await your response.

Nechama D. Arnold
Arnold Appraisal Group, Inc

Dear Nechama,

Millions of home improvements are made every year without building permits. Most appraisers don't get into the legality of an improvement they observe, unless they have some reason to suspect that it was made without a permit. In that case, they would be required to report their suspicions and comment what effect -- if any -- this has on the value of the property. I would be very careful about interviewing an owner. The safest thing you can ask would be, "Is there anything you would like to tell me that you think would be helpful to me in making this appraisal?" The problem is that they will start to ask you questions about the appraisal, and unless the lender/client has authorized you to discuss the appraisal with the homeowner, it is a violation of the USPAP to do so.

All things being equal, what you see is what you appraise. However, if you suspect the property is an illegal use, you must report it and state the basis of your suspicions. It is appropriate for you to ask a building inspector for a record of the permits that have been taken out on any property that you are appraising — but not ask if there is a permit for any specific upgrade. If this triggers an inspection, you and your lender/client run the risk of getting sued. You should quote the building inspector if you think what he told you was significant.

I think an appraisal report should speak for itself. I would think twice before volunteering to a lender/client any information that was not in the appraisal report. When a lender asks you specific questions about your appraisal, you probably should answer them preferrably in writing, and only if the information is not confidential. This is the problem with interviewing homeowners. If they give you some negative information about the property, and then say it is confidential, you are in a professional Catch 22. You are obliged to report negative information about the subject, but you are also required to respect confidentiality.


Ask Henry

IRS Definition of Value

Dear Mr. Harrison,

I have received and read REV since its inception. Thanks very much for the opportunity to use this great resource!

I am writing regarding the recent “Ask Henry” entry entitled: Fair Market Value, Market Value, IRS Value. I wonder if the U.S. Code of Federal Regulations (available online at could be of use in resolving this question. For instance, in appraising real property for estate settlement, I use the definition of “fair market value” found at Section 20.2031–1(b), Part 20, Chapter I, Title 26. (This is under, “Estate Tax, ; estates of decedents dying after August 16, 1954” and “Definition of gross estate; valuation of property”.) The definition found there is, “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Since USPAP requires that we also cite the source of our definition, I am able to give the appropriate citation as set out above. Would you concur with this methodology?

Thanks again for a great magazine/blog.
Best regards,
James P. Johnston
Wauneta, NE

Dear James,

I looked at the site and I think it is potentially a great resource for an attorney. However, I found it not useful as far as helping an appraiser determine what value to use. I entered each search term: "Market Value", "Fair Market Value" and "IRS Value". In each case, I got 200 references, which is the maximum it will give for one search. This means that I would have to read and understand 600 documents -- and it does not preclude the possibility that there might more. I need to stick to my original advice: for mortgage purposes, the FIREA definition must be used, and it is a useful definition for many other types of mortgages too. I would recommend that appraisers do not try to offer any other definition of value. This should be up to the lender/client, hopefully with the help of their attorney, and should be fully communicated to the appraiser as part of the required scope of work dialogue. The problem is that once the definition of value is changed, it requires selection of comparables that were sold under conditions that meet this atypical definition -- which is a good trick if you can do it.



Ask Henry

Disposition Value

Hello Henry,

Thanks in advance for taking the time to answer my question.

I have a client who's requesting a market value and a disposition value on every commercial report. If you were asked to do this, what steps would you take and how would you go about coming up with your disposition value? Thanks again.

Robert Jones
Certified General Real Property Appraiser

Dear Robert,

The USPAP requires that every appraisal include a statement as to what value is being estimated and a definition of that value. When you use the URAR, the form takes care of this with a statement that the value being estimated is market value, and provides the federally-approved definition of market value. In your scope of work dialogue with the client, you will need to agree on a definition of disposition value. Such a value would consider the typical marketing period, which would likely be different from the typical marketing time used for market value. It also might include how the property would be marketed — perhaps utilizing an auction or some other atypical method. One you have the definition, you will have to find comparable sales that meet those conditions.This often severely limits the availability of comparable data. You could contact the Lum Library of the Appraisal Institute in Chicago at (312) 335-4100 for any published definitions of disposition value.


Ask Henry

Fair Market Value, Market Value, IRS Value

Dear Mr. Harrison,

I have been asked by an attorney whether there is any difference between "Fair Market Value" (a term he sees in IRS rules and regulations) and "Market Value" as used in appraisals. I have told him that the term "Fair Market Value" has been superceeded by the term "Market Value," but he is still concerned that there could be some value difference attributed to the use of one term rather than the other. Can you help me clear this up for him please? Thank you!

Dear Donald,

The definition of "Fair Market Value" is contained in the FIRREA Act and is required for all mortgages where the U.S. government is involved. It is the value most often estimated by appraisers. Keep in mind that the USPAP requires that every appraisal state the type of value being estimated and provide a definition of that value. Different IRS publications and regulations seem to include different definitions of the terms Market Value and Fair Market Value. I suspect that if you based your appraisal on one of those definitions, the value you estimated might differ from an appraisal based on one of the IRS definitions. The attorney is going to have to research which of the IRS definitions applies to the matter they are involved in, and if an appraisal is needed in the case, be sure to supply the appraiser with that definition of value.


Ask Henry

Retrospective Field Review - No Intended Use

Dear H2,

I have an assignment for a retrospective field review, dated March 2006. I have asked the AMC to provide the intended use of the review appraisal. Their response is that they did not get this information from the Lender. My initial thoughts about responding to this situation are to: (a) clearly state this condition in the report; and, (b) provide an assumption of the intended use for the review and condition a possible revision if the assumed intended use is not correct. Is this the right way to proceed?

David L. Prymak
Dayton, TN

Dear David,

Statement 9 in the USPAP goes into detail as to why the appraiser must know the intended use of the appraisal. I am not aware of any exceptions to this rule.


Ask Henry

Comparable Sale Photos

Hello Henry,

I have been an appreciative customer and fan of your publications for decades. However, in your current online REV Magazine where an appraiser is complaining about having to take lots of comp photos, I submit the following sample of a letter received from one of our clients in this regard:

"There is commentary in the Addendum stating: "Some MLS photographs are used for comparable sales, as it had not been determined at the time of the property appraisal inspection which comparables would be most appropriate to use in the sales comparison approach." In the Appraiser's Certification, under Scope of Work (#3) [typically page 4 of the URAR form], it states: The appraiser must inspect each of the comparable sales from at least the street. Please address whether or not the appraiser inspected the comparables used in the appraisal report.”

Our clients insist that if the appraiser inspected the comps (as the Appraiser’s Certification indicates), then why couldn't they takea picture to show they were there? They can provide MLS photos in addition, if they better represent the property. Hopefully you can get the word out as to why this is simply good practice, as not doing so can delay the mortgage process.

A Concerned Fellow Appraiser
Name and email withheld by request

Dear Friend:

Keep in mind that the USPAP does not even require the the property be inspected. The URAR Fannie Mae #1004 - Freddie Mac #70 was created by Fannie and Freddie to codify some of their "Scope of Work" requirements which they require from Lenders selling mortgages to them.

I agree that in this age of digital cameras (and camera enabled cel phones) it would be prudent for the appraiser to photograph every potential comparable sale they inspect, and then select those photographs later for the comparable sales they use in the report. If the MLS photograph provides better information about the comparable sale, it should also be included in the report. The USPAP requires that there be a dialogue between the lender/client or their representative as what they require for each appraisal. This would be the appropriate place for the photo requirement to be communicated to the appraiser.

Back in the 1980s, we had a large appraisal company which at its peak had about 50 appraisers. This was before digital cameras were common. We had special 35mm cameras that recorded the date, time and address of each photograph. We required that our appraisers photograph every potential comparable sale when they inspected them from the street. We also keep all of these photos in the permanent work files. It was costly at the time, but in our judgment a worthwhile requirement. Now, with digital cameras and cheap CDs, mini-zip drives, and other storage capacity, I recommend that all appraisers follow this procedure.


Ask Henry

Partial Property Appraisals

Dear H2,

I recently lost a major client because I tried to tell them they were wrong. A valuation company, representing a bank, asked that all subjects with five acres or more ONLY be appraised with five acres, and anything over that should not be included in the appraisal. Also, if there were outbuildings, I was instructed not to include them in the grid, but only comment about their existence in the addendum.

I said I would only do this on a non-financial appraisal form. They refused, claiming as their reason that "not all appraisers have access to non-financial forms". After further research and agreement by various industry trainers and the Appraisal Foundation whom I consulted on the problem, the valuation company still said I was in the wrong, and fired me from their assignments. I lost thousands of dollars worth of work. Who is correct? And what can I do?

Launa Tierney

Dear Launa,

There is nothing in the USPAP that requires that you appraise all parts of a contiguous property. In all circumstances, however, your appraisal would have to make it clear that your appraisal was of only part of the contiguous property. As far as what the valuation company is asking you to do, the answer is that the USPAP says that you cannot make an appraisal that intended to deceive anyone (for more details look in the USPAP index "Misleading Communication.") It appears from your question that the valuation company wanted appraisals that would mislead Fannie or Freddie, who would not buy these mortgages if the knew about the extra acreage. I think you should go over their heads (or threaten to go over their heads) and send letters to the chief appraiser of the lenders whom they represent, telling them you have lost their business because the valuation company wanted you to violate the USPAP.


Ask Henry

Number of Comp Photo Reshoots

Dear Henry,

A larger appraisal management company is now requesting that the comp photos be recent to the season in which the appraisal is being completed. If a home is being appraised in the summer, they do not want comparable photos with snow or fall colored leaves on them.

How many times can an appraiser afford to retake old comp photos with gas at $3.15 a gallon, never mind the time consuming effort of going there in the first place. Some of my comps are in rural areas where each one could be 20-30 miles away from the other.

Is this a legal and legitimate request?

Jean Black

Dear Jean,

Often AMCs do not realize that their requests substantially increase the appraiser's costs. The USPAP requires that you have a scope of work dialogue with the lender/client. Unless something they requests conflicts with the requirements of the USPAP they are not in my opinion illegal or illegitimate. You really have four choices as to what to do. 1. Try to talk them out of the requirement. 2. Tell them that it requires extra work for which you expect extra pay. 3. Do what they request. 4. Refuse to do the assignment.


Ask Henry

Change of Address vs. Transferring an Appraisal

Dear H2,

Recently, I received a request from a mortgage company to change an address on an appraisal that had been ordered by an AMC for a major bank. A few days later, I received another message, with a copy of a memo from the Lender, saying that they were sending the appraisal over to the mortgage company but "assumed no liability for the content." The Lender had received the appraisal over one year ago. I spoke with a representative at the AMC and confirmed that since the issue had changed from a request for an address correction to a transfer of the appraisal to a new lender, the new lender would need to order a new appraisal. When I informed the contact person at the mortgage company that she would need to order a new appraisal, she said "no other appraiser has ever told them that since the HVCC took effect." It was my understanding from a CE class a few years ago that it is misleading to change the name of the Lender and that a new appraisal must be done. Please advise!

Kathy Vogt

Dear Kathy,

The USPAP has a lot of rules about changing the name of the lender/client on a report. The essence is that the lender and the appraiser together develop a scope of work for the appraisal. Therefore if all you do is change the name of the lender, you have not complied with the Scope of Work development process with the new lender. Changing a delivery address for the same Lender would probably be okay. Transferring an appraisal to a new lender would clearly violate the USPAP requirements.


Ask Henry

Comparable Sales - Nearby Location

Dear Henry,

In the following definition of Comparable Sale, what would you consider to be a reasonable "nearby" distance?

Comparable Sale: A comparable sale is a property, that is similar to the subject property in most respects, is located in a similar (nearby) location, and has sold recently at arms length. The selection of comparable sales is in most residential appraisals, the single most important determining factor in establishing value. It is the appraisers responsibility to adequately research the local real estate market and determine which comparable sales best represent the value characteristics of the subject property.

Benson J. Bercovitz

Dear Benson,

There are no benchmarks or USPAP rules that determines what is a reasonable distance to look for comparable sales. Often it is just a few blocks from a university, hospital or some other work place where many people in the market are motivated to live, to be nearby these facilities. On the other hand, when corporate executives are relocated to New York City, they often check out housing in New York, New Jersey and Southern Connecticut, so houses that appeal to this market can be hundreds of miles apart. The final determination of the best comparable sales is solely up to the appraiser.



Ask Henry

Extraordinary Assumptions, Retrospective Appraisals

Hello Henry,

I am developing a retrospective field review with an opinion of value for investigative purposes. The effective date is 4-1/2 years prior and the subject and all (three) comparables were investor rehabs/resales in an economically distressed neighborhood, with price increases of 50 - 60% within 3-9 months.

The main issue with the report under review is data verification and the credibility of the comparables' cash equivalent sales prices. Primarily, no 3rd party verification sources were cited and it does not seem that financing concessions were properly verified or adjusted for if they did exist. Seller-assisted financing was common in the market at that time. Most weight was given to Sale #1 which did not have an MLS listing. Sale #2 had a potentially unsupported 8%+/- upward condition adjustment for 'avg' vs 'good' condition; this sale had a "blank" listing #, but also had a 60% price increase within nine months, indicating that it may have rehabilitated in a manner similar to the subject. My research has revealed two sales that support the original value that have no MLS listings; and other "blank" MLS listings that appear to have been investor rehab/resales. I cannot verify these sales or the conditions of the sales in the normal course of business after an elapse of 4-1/2 years. Is it acceptable to use these sales in developing my OMV with the extraordinary assumption that they had no sales concessions that affected their prices? Or by using these unverifiable sales would I be committing the same poor practices found on the original report i.e., the pot calling the kettle black??

Thank you for your time,

Michael A. Ciaccio
Certified Residential Appraiser RD6539

Dear Michael,

I can only give you some general advice, as it is my policy not to comment on specific appraisals.

  1. It is up to the appraiser to select the most comparable sales. There are no USPAP restrictions on how this is done.
  2. It is up to the appraiser to make whatever adjustments are needed, keeping in mind that using unsupported adjustments can lead to trouble as the USPAP requires that the appraisal be credible.
  3. The USPAP has specific instructions about using "Extraordinary Assumptions" (2010-11 USPAP U-3 & U 18). From what you say, they may be appropriate in this instance. Be sure to follow the disclosure requirements.
  4. You must decide if your report is credible. If there is a reasonable doubt in your mind about its credibility, you should not make the appraisal, as it would violate USPAP to do so.


Ask Henry

Estimated Economic Life

Hello Henry,

It appears that some lenders are requiring an estimated economic life on all appraisal reports (even for 1073 form reports on Condos). I understand that banks are using this to determine if the life of the loan exceeds the economic life of the subject. The problem is that economic life is dependent on the owner's maintenance. If, say, a new owner doesn't have the funds and/or knowledge to repair a roof leak or get rid of termites, the economic life could easily go from 50 years to five years. Conversely, a well maintained building can last hundreds of years. How is the appraiser supposed to determine the owner's level of future maintenance? I could not find any reference to estimated economic life in USPAP.

Ken Janke

Dear Ken,

I think you should make it clear in your definition of estimated economic life that it includes the assumption that the property will receive normal care and maintenance.


Ask Henry

Switching Clients from USDA to FHA

Dear Henry,

Can an appraisal done as a USDA appraisal be switched to an FHA appraisal, or would the property have to be re-inspected?

Kind regards,
Jeff Bridwell

Dear Jeff,

Whenever the client changes, a new appraisal is required by the USPAP. This means that there must be a new scope of work dialogue with the new client. There are no USPAP requirements about inspections; therefore, if the effective date and inspection date are the same, I think you will just need to rewrite the appraisal being sure you have covered everything required in the new scope of work.


Ask Henry

Intended Users

Dear Henry,

On an FHA purchase appraisal, after the inspection, in the normal course of conversation with the home owner I was asked if there were any problems with their home. I stated that there were three problems that needed to be addressed, without going into the details of the problems. I told the homeowner that these issues needed to be addressed before the home could transfer title. By the time I got back to the office, the mortgage broker was on the phone telling me these issues did not exist. He called the appraisal management company and tried to cancel the appraisal. The appraisal management company then called me and told me that the appraisal was being reassigned because I disclosed information to an unintended user, and that I was in violation of USPAP rules. Did I really violate USPAP rules by answering a simple question honestly?

Kristina Fittipaldi

Dear Kristina,

The USPAP requires that every appraisal report contain a statement as to who the intended User(s) are. If you stated that the intended user was the Lender/Client, then the only people you can discuss the appraisal with is the Lender/Client. If you stated that an intended user was the property owner or someone else, you could discuss the report with them. Generally, it is a good policy not to discuss your appraisal with property owners, as all it can do is get you into trouble. When asked a direct question about the appraisal or your inspection, I recommend that you politely say you are not permitted to discuss the appraisal with anyone other than the intended user and that the owner is free to contact them for information.