Frequently Asked Questions about Canadian National Real Estate Appraisers

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What information must be retained in an appraiser’s workfile?

    1. CONTENTS OF A WORKFILE

An appraiser must prepare a workfile for each appraisal or appraisal review assignment. The RECORD KEEPING RULE states:

The workfile must include:

      • the name of the client and the identity, by name or type, of any other intended users;
      • true copies of all written reports documented on any type of media (A true copy is a replica of the report transmitted to the client. A photocopy or an electronic copy of the entire report transmitted to the client satisfies the requirement of a true copy.);
      • summaries of all oral reports or testimony, or a transcript of testimony, including the appraiser’s signed and dated certification; and
      • all other data, information, and documentation necessary to support the appraiser’s opinions and conclusions and to show compliance with USPAP, or references to the location(s) of such other data, information, and documentation.

A workfile in support of a Restricted Appraisal Report or an oral appraisal report must be sufficient for the appraiser to produce an Appraisal Report. A workfile in support of an oral appraisal review report must be sufficient for the appraiser to produce an Appraisal Review Report.

The appraiser’s assignment workfile serves several purposes. As in many other professions, the discipline of enforcement by public agencies and peer review, together with one’s self-discipline and dedication of effort, serves to ensure performance of assignments in compliance with professional standards. In addition to facilitating enforcement, a workfile aids the appraiser in handling questions from the client or an intended user subsequent to the date of the report.

An appraiser’s assignment workfile preserves evidence of the appraiser’s compliance with USPAP and other information as may be required to support the appraiser’s opinions and conclusions.

FAQ 2018-2019 Edition
© The Appraisal Foundation

I was asked by a client to provide an opinion of the market rent for a commercial property.

  1. MARKET RENT OPINION

Is such an assignment considered an appraisal?

Response: YES. USPAP defines an appraisal as an opinion of value, and market rent is an expression of value for the right to use a property. Therefore, to comply with USPAP in this assignment, an appraiser would have to follow STANDARD 1 to develop the opinion of the market rent, and STANDARD 2 to report the assignment results.

FAQ 2018-2019 Edition
© The Appraisal Foundation

Does USPAP permit real property appraisers to perform drive-by or desktop appraisal assignments?

  1. DRIVE-BY AND DESKTOP APPRAISALS

Response: YES.   The Comment to Standards Rule 1-2(e) states, in part:

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

This is also discussed in Advisory Opinion 2, Inspection of Subject Property. It states:

An inspection is not required by USPAP, but one is often conducted.

The extent of the inspection process is an aspect of the scope of work, and may vary based on assignment conditions and the intended use of the assignment results. It is the appraiser’s responsibility to determine the appropriate scope of work, including the degree of inspection necessary to produce credible assignment results given the intended use.

For further clarification, see AO-2.

FAQ 2018-2019 Edition

© The Appraisal Foundation

When developing a real property appraisal, what is an appraiser’s responsibility under USPAP if a lender refuses to provide a copy of the current agreement of sale of the subject property?

  1. AVAILABILITY OF CURRENT AGREEMENT OF SALE

Response: Standards Rule 1-5(a) requires an appraiser developing a real property appraisal, if such information is available to the appraiser in the normal course of business, to: analyze all agreements of sale, options, or listings of the subject property current as of the effective date of the appraisal.

The normal course of business for an appraiser when the property is known to be the subject of a pending transaction is to ask the client for the terms of the agreement. If this request is denied, then the appraiser should make reasonable attempts to obtain this information from other sources through legal means commonly available to and practiced by the appraiser’s peers. Standards Rule 2-2(a)(viii) and (b)(viii) also includes the requirement that:

If such information is unobtainable, a statement on the efforts undertaken by the appraiser to obtain the information is required. If such information is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required.

Refer to Standards Rules 2-2(a)(viii) and (b)(viii) for related reporting requirements, and to Advisory Opinion 1, Sales History for additional information.

FAQ 2018-2019 Edition

© The Appraisal Foundation