What Are the ASB Standards for Appraisals?

The Appraisal Standards Board (ASB) writes, amends, and interprets the Uniform Standards of Professional Appraisal Practice (USPAP), the accepted standards for professional appraisal practice in the United States. USPAP provides a framework that ensures ethical conduct and consistent, reliable results in valuation services. The enforcement of these standards is designed to promote and maintain public trust in the work of professional appraisers, underpinning the credibility of appraisal reports.

The Role and Authority of the Appraisal Standards Board

The Appraisal Standards Board (ASB) operates as an independent body under The Appraisal Foundation. Congress granted this authority through the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Enacted in response to the savings and loan crisis, FIRREA’s goal is to protect the public interest by ensuring that appraisals used in federally regulated transactions are reliable.

The board is composed of members with a wide range of expertise from sectors like real property, personal property, and business valuation. This diverse composition ensures that the standards are relevant and applicable across various disciplines.

The ASB’s function differs from the Appraiser Qualifications Board (AQB), another board within The Appraisal Foundation. The ASB sets practice standards—the “how-to” of appraising—while the AQB establishes the minimum education, experience, and examination requirements for appraisers. The ASB focuses on ethical and performance obligations, while the AQB focuses on baseline qualifications.

The ASB writes and interprets USPAP but does not have the power to discipline appraisers for non-compliance. Enforcement is carried out by state regulatory agencies. These state boards are required by federal law to enforce USPAP compliance for state-licensed and certified appraisers.

Core Components of USPAP

The Uniform Standards of Professional Appraisal Practice (USPAP) outlines the ethical and performance obligations for appraisers. It guides appraisers through the valuation process from engagement to the final report. The document begins with a Preamble and a Definitions section, which provides precise meanings for terms to ensure consistent interpretation.

The core of USPAP is built around a set of Rules. The Ethics Rule requires appraisers to perform services with integrity, impartiality, and objectivity. The Record Keeping Rule mandates that appraisers maintain a workfile for each assignment for at least five years, or for at least two years after the final disposition of any related judicial proceeding, whichever is longer. This file must contain all data supporting the appraiser’s conclusions.

The Competency Rule requires an appraiser to have the knowledge and experience to complete an assignment credibly. If not competent, an appraiser must disclose this, take steps to gain competency, or decline the assignment. The Scope of Work Rule obligates the appraiser to identify the problem to be solved and perform the work necessary to develop credible results.

Beyond the Rules, USPAP contains ten Standards with specific requirements for different appraisal assignments. These are organized by discipline, with separate standards for developing and reporting an appraisal. For instance, Standards 1 and 2 cover real property appraisal, Standards 7 and 8 address personal property appraisal, and Standards 9 and 10 apply to business valuation.

Who Must Comply with USPAP Standards

Compliance with USPAP is determined by law, professional affiliation, or client agreement. Under federal law, all state-licensed and state-certified appraisers must adhere to USPAP for federally related transactions. Many states have extended this requirement, mandating USPAP compliance for all appraisal work performed by licensed or certified appraisers.

Membership in professional appraisal organizations, such as the Appraisal Institute or the American Society of Appraisers, also requires adherence to USPAP. This means an appraiser not legally required to be state-licensed, like some personal property appraisers, must still comply with USPAP to maintain their professional designation.

A client may also contractually require an appraisal to be USPAP-compliant, even if the appraiser is not otherwise obligated. This is common in litigation, estate planning, and for certain government functions. For example, federal agencies like the Internal Revenue Service (IRS) often require appraisals submitted to them to conform to USPAP standards.

This system means a wide array of valuation professionals are held to these standards. It includes not only real estate appraisers but also those who value businesses, machinery, art, and other personal property. The broad applicability of USPAP is why it is considered the generally accepted standard for professional appraisal practice in the United States.

The Standard Development and Update Cycle

USPAP is not a static document and is updated to reflect changes in the market, technology, and the legal environment. The Appraisal Standards Board no longer uses a fixed two-year update schedule. New editions of USPAP are now released on an as-needed basis to ensure the standards remain relevant.

The development process for updates is public and transparent. The ASB issues “exposure drafts” of proposed changes and makes them widely available. The board actively solicits feedback from stakeholders like practicing appraisers, regulators, and users of appraisal services.

The ASB holds public meetings and accepts written comments on the proposed changes. This feedback is reviewed by board members and directly influences the final version of the standards. The ASB may revise or withdraw proposed changes based on the input received.

After the comment period, the board finalizes any changes and publishes a new edition of USPAP. Separately, the Appraiser Qualifications Board (AQB) requires real property appraisers to complete a 7-Hour National USPAP Update Course every two years. This education mandate is not tied to the release of a new USPAP document and ensures appraisers stay informed on current issues.