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When it comes to USPAP and a verification model, where is that model? USPAP makes it clear we have to verify the sales data, etc. But USPAP is strangely silent on what to verify means. It is equally mute on how to accomplish the verification it demands. So, is there a reason for this lack of communication on USPAP’s part? Or, is there some method to the ASB’s madness? To both questions, the answer is “YES”.
When USPAP does not define a term, it is because it sees no reason to do so. So, as we look at USPAP and a verification model, USPAP (the ASB really) concludes the standard definitions out there of verification, to verify, etc. suffice. They are sufficiently applicable to appraisal to define the terms, too, in an appraisal context. And the reason behind the ASB’s madness? Since, by definition, appraisers must be “…independent, impartial, and objective…”, this lack of a formal verification model allows (forces?) appraisers to conclude their own model(s). Since we are professionals, is this not the way it is supposed to be?
USPAP and a verification model? In reality, the verification model we have is the Fannie Mae and Freddie Mac default definition of Market Value. True, that definition has a lot of moving parts. But each part is a question to ask. To ask of whom? We ask the buyer, seller, broker, builder, etc. those questions. And the more people we verify with, the more answers we get. And the more answers we get, the closer we get to the truth of the transaction. So, what is the truth of the transaction? Simple. Was the sale arm’s-length? If the answer is no, we can confidently eliminate it. That’s something we appraisers can take all the way to the bank!