Across the valuation profession, there is a growing consensus and coordinated effort to converge appraisal standards. As leaders in the real estate, investment, and valuation communities, we adamantly support a single set of uniform standards that will provide the stability necessary for our financial, regulatory, and legal systems to function effectively while also sustaining public confidence in the work of appraisers.
Above all, consistent standards give the business and lending community confidence that appraisals are credible and reliable. In the United States, for instance, the Uniform Standards of Professional Appraisal Practice (USPAP), the Congressionally-authorized standards for real property appraisers created by The Appraisal Foundation, are standards that are promulgated in a transparent manner, with a primary focus of public trust; thus, providing confidence to clients and users of appraisal services. As one example, lending institutions embrace the security USPAP offers in order to offer credit for home loans. Such confidence facilitates transactions and ensures that our housing sector continues to grow.
The Appraisal Foundation and the International Valuation Standards Council (IVSC) are making positive strides toward bringing greater consistency to appraisal standards on the international stage. The two organizations met in 2015 to create a long-term plan for harmonizing their respective standards. This move is an important step in converging appraisal standards and will go a long away in reducing the prevalence of region-specific valuation standards across the globe, thus minimizing confusion for international investors.
In the United States, the prevalence of a single set of standards in the form of USPAP is also critical from a regulatory and legal standpoint. For example, when examining cases of fraud or misconduct, regulators are able to base their enforcement decisions on one set of standards, drawing upon precedent in the process. This ensures that the law is applied in a consistent manner and that regulators don’t face the burden of training personnel to become experts in multiple standards, along with the added burden of states having to implement multiple standards.
From the perspective of the general public, uniform standards offer a number of important advantages. Knowing that appraisers follow a consistent set of comprehensive standards that are widely accepted and enforced by the regulatory community increases the public’s confidence in the day-to-day work of appraisers. Sustaining the public’s trust is critical so that they have the confidence to engage in the home buying process.
Another important benefit of using a single set of standards is a greater ease for appraisers performing their jobs. Forcing appraisers to become competent in multiple standards is an unnecessary burden and will decrease their ability to become fully knowledgeable in one set of standards.
As leaders in the real estate, investment, and valuation communities, the global movement toward appraisal standards convergence encourages us. As we’ve seen in the United States, the benefits of a single set of standards are immeasurable. We encourage all with a stake in valuation to continue to push for consistent standards in 2016.
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