Appraisal basics
The standards a condemnation appraisal is written to
Two standards matter. USPAP sets the professional obligations of every certified appraiser in the United States. The Yellow Book supplements them where federal money is involved, and its requirements are stricter.
The two standards
What each one governs
USPAP
The Uniform Standards of Professional Appraisal Practice, issued by the Appraisal Standards Board. It is enforced through state licensing, so a breach is a disciplinary matter, not merely a professional embarrassment. It governs competency, independence, scope of work, the content of reports and record keeping. Every certified appraisal in this field complies with it or should.
The Yellow Book
The Uniform Appraisal Standards for Federal Land Acquisitions, prepared by the Interagency Land Acquisition Conference. It applies to acquisitions by federal agencies and to federally assisted acquisitions where the funding agency requires it. It is more prescriptive than USPAP about the larger parcel, the project influence rule and what evidence may support highest and best use.
Comparison
Where the Yellow Book goes further
| Issue | USPAP | Yellow Book |
|---|---|---|
| Scope | All appraisal practice | Federal and federally assisted acquisitions |
| Larger parcel | Addressed through competency and scope of work | Defined, with the three unities applied explicitly |
| Project influence | Handled through the definition of value used | Expressly excluded, with detailed guidance |
| Highest and best use | Must be supported | Must be reasonably probable, not merely possible, with evidence |
| Comparable sales | Appraiser judgement | Sales influenced by the project are generally rejected |
| Report content | Scope dependent | Prescribed content for federal acquisitions |
Why it matters to an owner
Standards are the ground for a challenge
An owner who disagrees with an appraisal has two kinds of argument available. The first is a difference of opinion: the appraiser chose these comparables, I would have chosen those. Differences of opinion are legitimate but weak, because the appraiser is entitled to a professional judgement.
The second is a standards argument: the appraisal did not do what the applicable standard requires. It failed to analyse the remainder separately. It used sales affected by the project. It stated a highest and best use without supporting evidence. These arguments are stronger because they do not ask anyone to prefer one opinion to another.
This is the practical value of knowing which standard applies. Ask early whether federal funds are involved in the project. If they are, the Yellow Book almost certainly governs, and its requirements give more to hold the report against.
Questions about standards
How do I find out whether the Yellow Book applies
Ask the agency whether the project receives federal funding and whether the acquisition is being conducted under the Uniform Relocation Act. Highway, transit, airport and many utility and flood control projects commonly are.
Is a USPAP breach useful in a compensation dispute
It can be. It goes to the weight a court or commission gives the report and, in clear cases, to whether the appraiser should be permitted to testify at all. It is raised through an appraisal review rather than asserted by the owner directly.
Does my own appraiser have to follow USPAP
Yes, if the appraiser is state certified. An appraisal prepared outside USPAP by someone not certified will carry very little weight and may be excluded.
Get a valuation question answered
If an offer has arrived and the number does not match what you believe the property is worth, the appraisal behind it is the place to look. Start with the pages below.