This is Diana with ABC – The Appraiser’s Business Companion. I have a couple of questions for you. Do you know the difference between the words Credibility and Reliability? The English Oxford Living Dictionaries state credibility is “1) The quality of being trusted and believed in. 1.1 The quality of being convincing or believable.” The root word credible is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) as “worthy of belief.
Comment: Credible assignment results require support, by relevant evidence and logic, to the degree necessary for the intended use.”
Now here’s the second question, did you know credibility is linked to the development and not the report? Go to the USPAP and do a word search and you’ll see credibility throughout Scope of Work (a development rule), you’ll see it in Standard 1 but not Standard 2, why? Can you peel back the onion of your reasoning and know why?
When trust is involved there must be an assumption that something or someone is reliable. Trust is the belief in the reliability and is a condition that carries an obligation of having confidence placed in one. Our clients, who receive our Appraisal Reports, are trusting in us the analysts, the author, the appraiser, to have developed our assignment results and our conclusions that are in our Appraisal Report credibly.
Notice when you run the word reliable in your word search of USPAP it happens in Standard 2. The reason is few Appraisal Reports will contain each and every step of our critical reasoning when going through the development of the appraisal process. The trust expected between us and our clients is a relationship that is built. Notice in the Reporting Standard how that trust is expected to be built between what the appraiser reports and the client receives from that Appraisal Report. In Standard Rule (SR) 2-2 (a) (viii) the content of an Appraisal Report must be consistent and the intended use of the appraisal and, at a minimum:……(viii) summarize the information analyzed, the appraisal methods and techniques employed, and the reasoning that supports the analyses, opinions, and conclusions; exclusion of the sales comparison approach, cost approach, or income approach must be explained;” It goes on to say in the first paragraph of the comment section, “An Appraisal Report must include sufficient information to indicate that the appraiser complied with the requirements of STANDARD 1. The amount of detail required will vary with the significance of the information to the appraisal.”
Now pause, take a breath and connect the dots. To be able to rely means there must be a reason to trust what the appraiser said. Remember, it’s the client/intended user you are writing to and they initiate their trust in you the appraiser when you are engaged. Why were you engaged? You proved to the state that you were capable of being trusted as a state licensed, certified appraiser. In order to receive that certification, you agreed, acknowledged by your signature, that you would adhere to USPAP.
Take another breath; you know what you did to determine the boundaries of your neighborhood, to reason the development or lack thereof in the land. You know not only what you researched but how you analyzed the data you gathered to form your opinions of the information reported from your market analysis and market trends results. You remember when you took the time to critically reason if there were any adverse conditions that could affect the marketability. You alone know the steps you took to reason through the highest and best use when market value was the basis of your value opinion. You and only you know if you came through the approaches doing more than speculation on the components of the approaches you used to develop the appraisal. And, since it is you who did all of these things, that evidence will be in your workfile. Because you know, the client is trusting that you developed credibly your appraisal and/or your assignment results. Your workfile, in part, will contain the evidence that supported the logic you imparted in your Appraisal Report.
Competency is a Rule that deals with development which is why SR 1-1 is a Competency pre-requisite; one that presumes ethics. You must be competent before you develop your appraisal and you must be ethical before you report your assignment result findings. Double check your reports for that deeper level of understanding when you communicate. If you didn’t know you, and you weren’t an appraiser, could your client have reason to trust in your reported findings? Does your appraisal report have reliability? Does your workfile contain the evidence of credibility?
This is Diana Jacob and you just had a tip from ABC-the Appraiser’s Business Companion.