Standards Rule 7-2

In developing a personal property appraisal, an appraiser must:
 

(a)

identify the client and other intended users;(note79)
 

(b)

identify the intended use of the appraiser’s opinions and conclusions;(note80)
 

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 other precisely defined terms; and
 

(iv)

if the opinion of value is to be 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: When developing an opinion of value in a specified market or at a specified market level based on the potential sale of the property, the appraiser must also develop an opinion of reasonable exposure time linked to the value opinion.

(d)

identify the effective date of the appraiser’s opinions and conclusions;(note81)
 

(e)

identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal,(note82) including:

(i)

sufficient characteristics to establish the identity of the item including the method of identification;
 

(ii)

sufficient characteristics to establish the relative quality of the item (and its component parts, where applicable) within its type;
 

(iii)

all other physical and economic attributes with a material effect on value;
 

Comment: Some examples of physical and economic characteristics include condition, style, size, quality, manufacturer, author, materials, origin, age, provenance, alterations, restorations, and obsolescence. The type of property, the type and definition of value, and intended use of the appraisal determine which characteristics have a material effect on value.

(iv)

the ownership interest to be valued;
 

(v)

any known restrictions, encumbrances, leases, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature; and

(vi)

any real property or intangible items that are not personal property but which are included in the appraisal;

Comment on (i)–(vi): The information used by an appraiser to identify the property characteristics must be from sources the appraiser reasonably believes are reliable.

An appraiser may use any combination of a property inspection and documents or other resources to identify the relevant characteristics of the subject property.

When appraising proposed modifications, 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 modifications.

An appraiser may not be required to value the whole when the subject of the appraisal is a fractional interest, a physical segment, or a partial holding.

(f)

identify any extraordinary assumptions necessary in the assignment;
 

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.

(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.(note83)