Problem Identification (AO-28)

Problem identification is the beginning point of every assignment. The appraiser must gather and analyze the information needed to properly recognize the appraisal, appraisal review, or appraisal consulting problem to be solved.  The information necessary for problem identification is presented in each Standard that addresses the development process for an appraisal, appraisal review, or appraisal consulting assignment.  For example, Standards Rules 1-2, 6-2, 7-2 and 9-2 provide the assignment elements that must be defined and analyzed in order to identify the problem to be solved in an appraisal assignment.  These assignment elements include the:

• client and any other intended users;

• intended use of the appraiser’s opinions and conclusions;

• type and definition of value;

• effective date of the appraiser’s opinions and conclusions;

• subject of the assignment and its relevant characteristics; and

• assignment conditions.

Identifying the problem to be solved is required in order to make critical judgments in determining the appropriate scope of work.  Therefore, the assignment elements necessary for problem identification in an appraisal, appraisal review, or appraisal consulting assignment also serve as reference points in determining whether the scope of work performed was appropriate to provide credible assignment results.(note1)

Additionally, proper identification of the problem to be solved is required for compliance with the COMPETENCY RULE, which states:

Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently; or alternatively, must… (Bold added for emphasis).

One of the assignment elements that affects the scope of work is assignment conditions.  Some assignment conditions are not a matter of choice, such as an inability to inspect a property because it has been destroyed.  Other assignment conditions are a matter of choice, such as a client’s request to perform a desktop appraisal of machinery and equipment to reduce fees.

TABLE OF CONTENTS