Does an Appraisal Report Follow USPAP? Six Things to Check
Key TakeawaysUSPAP, the Uniform Standards of Professional Appraisal Practice, sets the rules for how an appraisal is
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Key Takeaways
- USPAP, the Uniform Standards of Professional Appraisal Practice, sets the rules for how an appraisal is developed and reported. In Texas, licensed and certified appraisers must follow it, with narrow exceptions.
- Six parts of a report show the most about compliance: the appraiser’s license and certification, the intended use and user, the scope of work, independence, competency, and the reasoning behind the value.
- A compliant report shows its work. A number with no explanation is a warning sign.
- Broker price opinions and online estimates are not USPAP appraisals, and in Texas a broker opinion must say so in writing.
- USPAP does not set a price or guarantee that two appraisers will agree.
Most owners meet USPAP once, as a short line near the end of an appraisal report stating that the work was prepared in conformity with the standards. Few read further. That line matters, but it is a claim, not proof. The rest of the report is where compliance actually shows up.
This checklist is drawn from The Ambrose Group’s guide to what USPAP is and why it matters, written by James Hamon. It walks through six parts of a report an owner, lender or attorney can review without appraisal training.
A short background on USPAP
USPAP is written by the Appraisal Standards Board of The Appraisal Foundation. It emerged from the savings and loan crisis of the 1980s, when weak appraisals contributed to lending losses and public trust in valuations dropped. The idea was simple: if every appraiser follows the same rules, a report can be relied on without trusting the individual who wrote it.
The current edition is the 2024 Edition, effective January 1, 2024, with no fixed end date. Older sources describe a two-year update cycle, but that practice has ended. Changes now go through an exposure draft and a public vote.
In Texas, Occupations Code Section 1103.405 requires licensed and certified appraisers to follow the current edition, with limited exceptions. The Texas Appraiser Licensing and Certification Board, or TALCB, handles complaints about noncompliance.
Check 1: Who signed the report, and are they licensed?
Start with the signature and certification. A USPAP report includes a signed certification from the appraiser responsible for the conclusions. That person should hold a Texas appraiser license or certification appropriate for the property. For commercial property, that usually means a Certified General license.
The license number can be checked through TALCB’s License Holder Search. Some appraisers also hold professional designations from organizations such as the Appraisal Institute. A designation is separate from the state license and has its own requirements. The difference is covered in a related article on what an MAI appraiser is.
If the report is signed by one person and the property was inspected by another, the report should say so. That arrangement is common and acceptable when it is disclosed.
Check 2: Does it state the intended use and intended user?
Every USPAP appraisal starts with a defined purpose. The report should state what the appraisal is for, such as financing, litigation, a tax protest or estate planning, and who is expected to rely on it.
The intended use shapes the whole assignment, from the data the appraiser collects to how detailed the analysis needs to be. A report written for a refinance may not be the right document for a court case, even on the same property. If the report never says what it is for or who will rely on it, that is worth raising with the appraiser.
Check 3: Is the scope of work described?
Under USPAP, the appraiser decides what research and analysis are needed to reach a credible result, and then discloses that scope in the report. The client does not set the scope.
A good scope section explains what the appraiser did and did not do. It should cover the property inspection, the market data reviewed, the approaches to value used, and any approach that was excluded along with the reason. If the income approach was skipped on an income-producing building, the report should explain why.
Owners who want to understand the steps behind a full appraisal, from inspection through the final report, can find them in this real estate appraisal guide.
Check 4: Is the appraiser independent?
USPAP’s Ethics Rule requires impartiality, objectivity and independent judgment. An appraiser cannot accept an assignment where payment depends on reaching a predetermined result, and cannot advocate for any party.
Two points in a report help confirm this. First, the certification should address independence and state that compensation is not contingent on the value. Second, the appraiser must disclose any services performed on the same property within the previous three years. If either item is missing or unclear, it is reasonable to ask about it.
Independence also applies before the report is written. If anyone suggests that the fee depends on the number, that is a red flag regardless of what the final report says. The 2024 Edition also added nondiscrimination language to the Ethics Rule.
Check 5: Does the appraiser have the right experience?
The Competency Rule requires an appraiser to have the knowledge and experience needed for the property type and the market. If the appraiser lacks that experience, the rule requires disclosure and steps to fill the gap before accepting the work.
A report on a specialized property, such as a medical office building, a self-storage facility or an industrial site, should reflect familiarity with how that type of property trades. Comparable sales should be relevant, and the analysis should account for the factors that drive value in that market. Asking an appraiser about prior assignments involving similar properties is a simple way to check this before an engagement begins. Firms offering commercial and real estate appraisal services should be able to answer that question directly.
Check 6: Does the report show its reasoning?
This is the most important check. A credible appraisal does not just give a number. It explains how the number was reached.
On a sales comparison, the comparables should come with clear adjustments rather than a plain list of nearby addresses. On income-producing property, the report should include income and expense data and explain why a particular capitalization rate was chosen. Near the end, a reconciliation section should show how the appraiser weighed each approach to arrive at the final value.
USPAP’s Record Keeping Rule supports this. The appraiser must keep a workfile for at least five years after preparing the report, or at least two years after the final disposition of any court case in which the appraiser testified, whichever is later. That means the reasoning behind a value should still be available years later if the report is challenged.
A report that cannot be followed step by step gives a lender, an appraisal district or opposing counsel an easy target.
What is not a USPAP appraisal
Some documents look like appraisals but are not.
A broker price opinion or comparative market analysis can be useful for pricing a listing. In Texas, a real estate license holder who provides one must include a written statement, under 22 Texas Administrative Code Section 535.17, that it is an estimated sale price and not an appraisal prepared by a licensed appraiser under USPAP.
An online automated estimate is different again. It runs public data through a model, usually without anyone visiting the property. It has no certifying appraiser, no stated intended use, no scope of work and no workfile. It can be a starting point, but it cannot be checked against the six items above.
The difference matters in practice. Lenders in federally related transactions require USPAP-compliant appraisals. In a Texas property tax protest involving property valued at $1 million or less, an owner who files a qualifying appraisal from a certified appraiser can raise the burden of proof the appraisal district must meet, and the statute requires the appraisal to state that it follows USPAP.
What USPAP cannot do
USPAP sets rules for how the work is done and reported. It does not set a price. Two appraisers can follow every rule and still reach different, defensible conclusions, because they may select different comparables or weigh the approaches differently.
For that reason, the support behind a value tells an owner more than the value itself. An owner with new information can ask the appraiser to reconsider. TALCB reviews complaints about noncompliance, but it does not take up complaints that are only about the number. A second option is an appraisal review, where another appraiser tests the original report against the standards.
Using the checklist
Going through these six items takes about as long as one careful read of the report. Agreeing with every conclusion is not the point. What matters is whether the report can be checked at all, and whether it names a qualified appraiser, states its purpose and scope, stays independent, fits the property type, and explains its reasoning.
About the author: James Hamon is Vice President of Appraisal Services at The Ambrose Group in Jersey Village, Texas, where he has spent his entire 21-year career. A Certified General Real Estate Appraiser and Licensed Property Tax Consultant in Texas, he specializes in complex litigation valuations. The Ambrose Group has served Texas property owners since 1994.
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