PROBLEM IDENTIFICATION AND INTENDED USE

The Importance of Intended Use

An appraisal's credibility is based on intended use. Intended use is how the client will use the appraisal.

What decisions will be made?

What actions will be taken in reliance upon the appraisal report?

What are the needs of intended users?

The appraiser must understand the client's intended use in order to

identify or define the problem, and

develop the solution to the problem (determine the scope of work);

determine whether or not the appraiser has the knowledge and experience to complete the appraisal credibly;

determine the relevant service and report type needed by intended users

The Types of Intended Use

There are many reasons for seeking an appraisal.

To purchase or sell property

To acquire home owner's or renter's insurance

To settle an insured loss or damage claim

Insurance appraisal clause, appraisal provision, arbitration, mediation

Litigation support for an object of disputed value in a legal matter

For IRS tax purposes

to determine value for estate tax or charitable contribution deduction

To meet probate court requirements or trust management

For equitable distribution

Divorce, dissolution of marriage

Bankruptcy

Forced liquidation

Informed decision making i.e. down-sizing

Appraisal Review: a review of the quality or value opinion in an appraisal report

Valuation Varies Based on Other Conditions Applicable to Intended Use

The conditions that apply to a value definition must be identified and properly applied. Market selection and the subsequent research and analysis is guided by the applicable conditions of the value definition. There are different types of value. The value definition that is most relevant to intended use must by identified by the appraiser.

For instance, a market value type of definition, such as fair market value, has conditions that apply to the determination of the relevant market, and that establish market perspectives such as the knowledge and motivations of market participants, terms of sale and market exposure time. A replacement value focus is established by the terms of an insurance policy. The appraiser must establish the applicable value definition and fulfill the conditions and requirements that apply to the chosen definition. These decisions are guided by how the client will use the appraisal.

The appraisal results (the appraiser's opinions, analyses and conclusions) must be credible and meaningful to the client in the context of the intended use. USPAP requires the appraiser to properly execute the steps judged necessary to develop and report credible and meaningful assignment results. Credible and meaningful assignment results are judged relevant to intended use.

To find out more about the types of personal property appraised visit PROPERTY TYPES

To find out more about Novotny's Appraisal Services visit his HOME PAGE now.

To find you how Novotny acquired 30+ years of appraisal experience see ABOUT US

If you need a generalist antiques and personal property appraiser CONTACT NOVOTNY