Question:

USPAP requires appraisal reports to identify the type and definition of value and cite the source of the definition. What is the “type of value?” Why is this no longer referred to as the “purpose” of the assignment? What sources can be used to comply with the requirement to cite the source of the definition of value?

Response:

STANDARDS 2, 6, 8 and 10 require that appraisal reports state the type and definition of value and cite the source of the definition. The exact wording varies by reporting option.

Previously, the term “purpose” in USPAP was used to refer to several different concepts, including the type and definition of value. For the 2005 edition of USPAP, this and other special meanings of this term were eliminated to increase clarity. Where it is now used in USPAP, “purpose” will only convey the standard dictionary meaning of the word.

The “type of value” is the general class or category of value. Examples include market value or fair value.

The “definition of value” provides a specific description of the characteristics and conditions of the type of value. Examples include definitions provided on a form report, in FIRREA, in U.S. accounting regulations, and U.S. tax regulations.

USPAP does not provide any specific definition of value or endorse any particular source. Sources could include, for example, a regulatory agency, a legal jurisdiction, an engagement letter, or a textbook.