Standards 3 & 4: Appraisal Review & Key Advisory Opinions

Standard 3: Developing an Appraisal Review

An appraisal review develops an opinion about the quality of another appraiser's work performed as part of an appraisal or appraisal review assignment. The subject can be an entire report, part of a report, a workfile, or other identified work. Review the work, not the personality or reputation of its author.

Standard 3 governs review development. SR 3-1 addresses general development duties, SR 3-2 problem identification, and SR 3-3 the necessary review methods. Standard 3 consists of those three Standards Rules. Start with the actual assignment, its intended use, and the work under review.

Identify the Review Problem

Identify the client, other intended users, intended use, purpose, work under review, relevant dates, and any extraordinary assumptions or hypothetical conditions. Determine whether the assignment includes the reviewer's own opinion of value. This decision changes the required analysis and must be clear before the reviewer reports conclusions.

A desk review may use the report and other reliable information without a personal inspection. A field review can include property and comparable observations. Neither label fixes every inspection step or excuses a scope that cannot produce credible results. A report-only review can identify an unsupported adjustment without claiming that the reviewer has independently verified every property feature.

Evaluate the work under the requirements applicable to that work: its intended use, governing standards, market conditions, and relevant facts. Information the original appraiser should have considered can inform the quality review. Information unavailable to that appraiser in the normal course of business must not be used to fault the original work, although it may be relevant to a separate current value assignment. Keep those analytical questions distinct.

Develop Reasons for Agreement or Disagreement

When necessary for credible results, assess completeness, accuracy, adequacy, relevance, and reasonableness. Identify specific defects and explain why they matter. "The value seems high" is not a supported review conclusion. "The report includes a partly below-grade level in above-grade area despite the applicable measurement requirement, affecting its size comparisons" identifies a testable defect.

For a hypothetical example, the original report values a house at $500,000 using three adjusted sales. One comparable's bathroom adjustment is unsupported and two sale dates are inconsistent with the stated trend period. The reviewer can conclude that the analysis is not adequately supported and request correction. That quality opinion does not by itself establish the reviewer's own market value at $475,000 or any other amount.

A quality review should distinguish a clerical error from an error that affects credibility. If a table rounds an adjustment by $1 while all totals follow the stated convention, explain its limited significance. If the property interest is wrong, the entire model may address a different asset. Do not treat every disagreement in reasonable judgment as a standards violation.

When the Reviewer Develops a Value Opinion

Under SR 3-3(c), an own-value component is subject to the applicable development standard. For a real property opinion, Standard 1 applies. This remains true when the reviewer's value concurs with the original opinion. Expressing an opinion about whether a conclusion is supported is different from adopting it as one's own value conclusion; make the intended meaning explicit.

The reviewer need not replicate every step. Credible information from the work under review can be extended into the reviewer's development process on an extraordinary-assumption basis as provided in SR 3-3(c). Unreliable information must be replaced with adequate data or analysis. The reviewer must identify the own-value effective date, which may differ from the original date, and obtain enough evidence for that date and purpose.

Suppose a reviewer independently adopts the original physical description on a disclosed reasonable assumption but replaces an unsupported rent estimate with verified comparable rents. The own-value calculation must use consistent property rights, income definitions, vacancy, expenses, and rates. A borrowed data point does not relieve the reviewer of deciding whether reliance is credible. Any material uncertainty must be handled under the relevant USPAP conditions, not hidden behind the word "review."

Standard 4: Reporting an Appraisal Review

Standard 4 governs communication. SR 4-1 requires a separate, nonmisleading review report with sufficient information for intended users and clear disclosure of assumptions and limiting conditions. SR 4-2 provides one Appraisal Review Report content framework. It does not offer a separate "Restricted Appraisal Review Report" category analogous to Standard 2's written appraisal options.

Required Identification and Scope

The report identifies the client and intended users, intended use, purpose, and work reviewed. Describe the property interest involved in that work, the date and effective date of the work, and its appraiser or any appropriately disclosed withholding of identity. State the review report date, scope, significant assistance, applicable assumptions and hypothetical conditions, and the reviewer's opinions and reasons for disagreement.

If the client requests anonymity, follow the applicable reporting provisions and retain the identity in the workfile. Do not invent a different client or imply that an unidentified borrower ordered the work. A receiving lender or attorney is not automatically an intended user merely because someone forwards the report.

The scope disclosure should let the intended user understand what the reviewer did and did not investigate. If no interior observation occurred, say so. If the assignment reviewed only the cost approach, do not imply an independent review of every comparable sale or a complete appraisal of the property. The report's conclusions must stay within the analysis actually performed.

Reporting the Reviewer's Own Value

When the assignment includes the reviewer's value or further review opinion, state what information and analysis were accepted as credible, the relevant effective date, and the additional evidence and reasoning. Under SR 4-2(j), an own-value conclusion may be included in the review report without a separate appraisal report. Supporting a different real property conclusion requires the applicable Appraisal Report content minimums, except as the rule specifies for certification.

For example, a reviewer may report: "The original cost approach omitted a supported external impairment. For the separately identified own-value component, the accepted site evidence already reflects its land share; the additional building loss and revised reconciliation are described below." The report should show the analysis supporting the different conclusion. Merely writing a lower number does not satisfy either review or appraisal development requirements.

Certification and Oral Review Reports

SR 4-3 requires the prescribed signed certification. The reviewer addresses impartiality, relevant interests, prior services, inspection, assistance, noncontingent engagement and compensation, and compliance. The certification concerns both the work and the property as required by the review standard; it is not a judgment about the original appraiser's character.

SR 4-4 allows oral review reports addressing substantive SR 4-2 matters to the extent possible and appropriate. A workfile must exist before reporting; the oral record and signed, dated certification are retained as the Record Keeping Rule requires. A short telephone review can still be an appraisal review if it communicates an opinion about appraisal work quality.

Advisory Opinions and FAQs: Guidance Rather Than New Standards

Advisory Opinions and FAQs illustrate applications of USPAP but do not establish new binding standards. There are currently no active Statements on Appraisal Standards. Cite the relevant requirement when explaining a compliance issue rather than claiming that disagreement with an illustrative example itself establishes a violation.

Useful guidance topics include sales history, inspection of subject property, research in the normal course of business, identification of intended users, retrospective and prospective opinions, report content, review assignments including an own-value opinion, and nondiscrimination. Consult the current publication or official update for the guidance applicable to the actual question.

The Foundation's current USPAP page confirms the 2024 standards remain current and identifies AO-41, adopted April 23, 2026, addressing technology in appraisal and appraisal review. Its subject includes AVMs, regression, statistical software, and generative AI. Technology guidance should be read with the binding competency, scope, development, reporting, and confidentiality requirements.

A practical review checklist is: identify the requirement; locate the relevant evidence; determine whether the work satisfies the requirement in context; distinguish quality review from an own-value assignment; explain material disagreements; and communicate only the conclusions actually supported. This preserves objectivity without converting a review into an unsupported replacement appraisal.