Broker Price Opinions, Value Reconciliation, and other Alternative and Preliminary Valuation Products
The Office of Real Estate Appraisers (OREA) receives ongoing inquires from our licensee’s with questions regarding whether or not they can develop an opinion of value by doing Broker Price Opinions (BPO), desktop reconciliation of values, or a variety of other kinds of alternative and/or preliminary valuation reports. The answer to these questions can be found in the Uniform Standards of Professional Appraisal Practice(USPAP) and Title 10 of The California Code of Regulations.
The 2012-2013 edition of USPAP defines the word “appraisal” as:
(noun) the act or process of developing an opinion of value; an opinion of value. {page U-1}
(adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services. {page U-1}
Therefore, when developing an opinion of value, regardless of the reporting format (BPO, Reconciliation of Value, etc.), an appraisal is being performed.
Title 10 of the California Code of Regulations, Section 3701, specifically requires that every holder of a license shall conform to and observe the Uniform Standards of Professional Appraisal Practice (USPAP). Anytime an opinion of value for real property is reported by an appraiser licensed by the State of California, that appraisal must comply with USPAP! Therefore, prior to accepting any assignment, regardless of the format in which the opinion of value is provided, the appraiser must familiarize themselves with the applicable portions of USPAP and develop, report, and maintain records according to the applicable USPAP rules and standards.
Furthermore, if you are a registered Appraisal Management Company (AMC), Title 10 of the California Code of Regulations, Section 3577, requires that AMC’s must adopt reasonable procedures designed to ensure that all appraisal assignments completed by its independent contractor or employee appraisers are performed in accordance with USPAP. Although, delivering a USPAP compliant report is ultimately the responsibility of the appraiser, an AMC must be cautious about ordering valuation products that are not USPAP compliant.
The business model of the appraisal industry continues to change and new valuation products are, and will continue to be developed and requested in lieu of USPAP compliant appraisals. A California State licensed appraiser, when acting as an appraiser, is required to comply with USPAP. In some cases supplementing the requested reporting forms will be required to be in compliance with USPAP. In other cases, when compliance with USPAP is not possible, turning down the assignment maybe the only option. Remember-forms are not always USPAP compliant, however, USPAP compliance is always a repurement for a licensed appraiser the appraiser is!
