Appraisal Assignment The appraisal practice in the U.S. is regulated by the various states. The financial industry is the main consumer of real estate appraisal services or "valuations". Other uses include portfolio management, tax planning, and internal decision making. These reports, when the client institutions are FDIC insured, must be USPAP (Uniform Standards of Professional Appraisal Practices), but also FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) compliant. These are federal guidelines. All appraisals produced by certified and designated appraisers, whether for loan underwriting, tax or estate planning, portfolio management or internal reporting, must be USPAP compliant and conform to the standards set forth by the Appraisal Foundation, a non-profit organization authorized by Congress as the source for appraisal standards and appraiser qualifications. At times the testimony of an appraiser is required in a deposition or in court as part of legal action by a plaintiff or in arbitration. Appraiser's testimony includes a report, whether written or oral. Appraisal results often include, but are not limited to; market value, stabilized value (with retrospective, current and/or prospective effective value dates), market rent conclusions and highest and best use.
Portfolio Management Portfolio management is a service provided to companies or institutions that manage or own multiple commercial property investments. Sometimes these investments are grouped by property type and use, by size or location, or by the funding type or date. Users of portfolio management services are REITS, pension funds, insurance companies, banks and other entities with multiple real estate holdings. What is provided to the clients includes periodic market value determinations, analysis of market conditions in the respective property locations, and market condition updates to the assets. Portfolio management can include appraisal assignments and assignment results conducted by Independent Valuation Consultants in addition to the overall management of the holdings, but may also include the solicitation of outside appraisers. Simply manage the process and the assignment results.
Appraisal Review Assignments Per USPAP, the "Appraisal Review" is the act or process of developing and communicating an opinion about the quality of another "appraiser's" work that was performed as part of an appraisal or appraisal review assignment. Many financial institutions do not have internal appraisers, or do not have a enough internal appraisers to review the quantity of appraisal reports submitted for lending purposes. Most of these institutions have used at some time an outside review by a designated or certified appraiser. This is the most common use of the appraisal review. In addition, lawyers or the courts may solicit an appraisal review as part of the legal proceedings.
Consulting Consulting is a non-appraisal related function and would not be regulated under the standards of USPAP (or FIRREA). It seeks to utilize the real estate professional's experience and expertise without the constraints and limitations of the strictly regulated appraisal profession. At the start of any consulting assignment the appraiser must clearly represent to the client that the services provided are not related to an appraisal assignment and that they are not acting in the capacity of an appraiser. Uses for consulting include, but are not limited to; market analysis, data collection, purchase decisions, market rent consultation, site selection, construction decisions and asset re-positioning. It should be noted that each one of these scopes could also involve an appraisal assignment and assignment results. In this case it would cease to be a consulting assignment.