ADVISORY OPINION 12 (AO-12)

This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

SUBJECT: Use of the Appraisal Report Options of Standards Rules 2-2 and 8-2 1

APPLICATION: Real Property, Personal Property

THE ISSUE:

Standards Rules 2-2 and 8-2 of the Uniform Standards of Professional Appraisal Practice (USPAP) offer three written appraisal report options. What are appropriate circumstances for the use of these options?

ADVICE FROM THE ASB ON THE ISSUE:

Relevant USPAP & Advisory References

Deciding Which Report Option to Use

Relevant USPAP & Advisory References (AO-12)

Under Standards Rules 2-2 and 8-2, an appraiser may communicate the results of an appraisal in one of three formats: Self-Contained Appraisal Report (Standards Rules 2-2(a) and 8-2(a)), Summary Appraisal Report (Standards Rules 2-2(b) and 8-2(b)), or Restricted Use Appraisal Report (Standards Rules 2-2(c) and 8-2(c)).

Deciding Which Report Option to Use (AO-12)

As with other business decisions that involve the application of USPAP, the existence of appraisal report options implies a dialogue between the appraiser and the client to define the appraisal problem prior to reaching an agreement to perform an assignment. Part of that dialogue is a decision on which report option is appropriate for the assignment. This dialogue/decision process can be applied to a single assignment or to a series of assignments performed by an appraiser for the same client. In most situations, the client may decide which report option is appropriate for the assignment. The appraiser may agree to provide the report option suggested by the client as long as the report option is consistent with the intended use of the appraisal.

The decision between using a Self-Contained Appraisal Report and a Summary Appraisal Report is not absolute. The following factors should be considered by the appraiser and the client in deciding whether a Self-Contained Appraisal Report or a Summary Appraisal Report is appropriate:

the intended use of the appraisal;
that the appraiser and client understand the differences between the options; and
whether the intended use of the appraisal warrants comprehensive or summary disclosure of the steps in, and information considered in, the appraisal process.

A decision to use the Restricted Use Appraisal Report is absolute because the minimum level of information required in a Restricted Use Appraisal Report is not designed to address the needs of any third-party users. When an appraiser uses the Restricted Use Appraisal Report option, a prominent notice to any reader must be provided. The prominent notice must warn any reader of the report that the appraiser’s opinions and conclusions set forth in the report may not be understood properly without the additional information in the appraiser’s workfile. The Restricted Use Appraisal Report may be useful when:

the client is the only intended user of the appraiser’s opinions and conclusions set forth in the report;
the client understands the limited utility of this option;
the intended use of the appraisal warrants restricted disclosure about the appraisal process steps completed in the assignment; and
the client (the only intended user) does not need the level of information required in a Self-Contained Appraisal Report or Summary Appraisal Report.

This Advisory Opinion focuses on the use of the appraisal report options and should be read in conjunction with Advisory Opinion 11, which focuses on the content of the appraisal report options of STANDARDS 2 and 8.

This Advisory Opinion is based on presumed conditions without investigation or verification of actual circumstances. There is no assurance that this Advisory Opinion represents the only possible solution to the problems discussed or that it applies equally to seemingly similar situations.

Approved July 20, 1994

Last Revised October 28, 2005

1.	See Standards Rules 2-2 and 8-2. See also related Advisory Opinion 11, Content of the Appraisal Report Options of Standards Rules 2-2 and 8-2.