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Adopted: November 29, 2012

INTRODUCTION

One of the most common complaints received by the Board is that an appraiser did not value a property correctly. The value reached by the appraiser may be actually appropriate, however, the report failed to justify that value. This avoidable problem can be addressed by appraisers focusing on the relatively straightforward requirements of Standard Rule 1-6. 

RULE

Standard Rule 1-6

In developing a real property appraisal, an appraiser must:

(a)       reconcile the quality and quantity of data available and analyzed within the approaches used; and

(b)       reconcile the applicability or suitability of the approaches used to arrive at the value conclusion(s).

ADVISORY

The purpose of Standard Rule 1-6 is clear on its face, that once an appraiser has done the work of choosing the data used in creating a value, the choices of data and the basis for the value must be justified. Generally speaking, section (a) of the rule requires that the appraiser show, in writing, how they came up with a value WITHIN the chosen approach. For example, a written reason for the basis for final value within the Market Approach would explain how and which sales are weighted in that value and why. Similarly, section (b) of the rule follows up on this justification with the requirement that the appraiser must identify which approach was used and justify, in writing, why that approach was used for the final value. As one might assume, the provisions section (a) must be fulfilled before section (b), thus the appraiser must explain the value picked within each individual approach before the appraiser can justify the approach chosen as that appropriate for the final value.