USPAP, Facts, and Opinions – TAA Podcast 088
Tim Andersen, The Appraiser's Advocate Podcast · Tim
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Show Notes
When it comes to USPAP, facts, and opinions, there is a lot of confusion out there. This podcast helps to unravel the facts from the opinions, the truth from the hype. It follows, then, this podcast points some of these out, right?
Some appraisers think that with USPAP, there is confusion over what is a fact and what is an opinion. As a result of this confusion, the appraiser’s facts are often wrong, so the appraiser’s opinions lack credibility. USPAP defines an appraisal as “…the act or process or developing an opinion of value…”, but it does not define a fact. On the other hand, a fact is a “…thing that is known or proved to be true”. From these, it is clear a fact and an opinion are not the same things. To form an opinion, therefore, an appraiser uses facts. Opinions proceed from facts. Indeed, they proceed from the collection, verification, and analyses of facts. It is easy to see that for us as appraisers, an opinion of market value, without a foundation of market-specific facts, is nothing more than a guess.
So, when it comes to USPAP, facts, and opinions, there is a logical and deductive model we must follow. This model leads to a credible value opinion rather than merely a guess. That model is to collect, verify, and analyze property-specific and market-specific facts. Then, from those analyses, draw a conclusion the market supports. Not one the client likes. But one the market supports. And, of course, we maintain that support in the workfile. This demonstrates we did not guess, and that we complied with USPAP. Thanks for listening! And by the way, there are only two opinions in an appraisal: highest and best use and market value. Everything else must be a fact!