Standards Rule 6-2

In developing a mass appraisal, an appraiser must:

(a)

identify the client and other intended users;(note63)

(b)

identify the intended use of the appraisal;(note64)

Comment: An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased.
 

(c)

identify the type and definition of value, and, if the value opinion to be developed is market value, ascertain whether the value is to be the most probable price:

(i)

in terms of cash; or

(ii)

in terms of financial arrangements equivalent to cash; or

(iii)

in such other terms as may be precisely defined; and

(iv)

if the opinion of value is based on non-market financing or financing with unusual conditions or incentives, the terms of such financing must be clearly identified and the appraiser’s opinion of their contributions to or negative influence on value must be developed by analysis of relevant market data; 

Comment: For certain types of appraisal assignments in which a legal definition of market value has been established and takes precedence, the JURISDICTIONAL EXCEPTION RULE may apply.
 

(d)

identify the effective date of the appraisal;(note65)

(e)

identify the characteristics of the properties that are relevant to the type and definition of value and intended use(note66), including:

(i)

the group with which a property is identified according to similar market influence;

(ii)

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

(iii)

their location and physical, legal, and economic characteristics;

Comment: The properties must be identified in general terms, and each individual property in the universe must be identified, with the information on its identity stored or referenced in its property record.

When appraising proposed improvements, an appraiser must examine and have available for future examination, plans, specifications, or other documentation sufficient to identify the extent and character of the proposed improvements.(note67)

Ordinarily, proposed improvements are not appraised for ad valorem tax. Appraisers, however, are sometimes asked to provide opinions of value of proposed improvements so that developers can estimate future property tax burdens. Sometimes units in condominiums and planned unit developments are sold with an interest in unbuilt community property, the pro rata value of which, if any, must be considered in the analysis of sales data. 

(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.(note68)