Appraisal disciplines have a confusing array of credentials. This occurs because:

There are numerous asset types (e.g. real estate, businesses, machinery, fine arts, jewelry), with each asset type having its own sponsoring organizations, and

There are numerous appraisal and other organizations that sponsor appraisal certifications, with wide variance in the standards employed.

This is important for anyone attempting to evaluate the quality of appraisal reports or proposals to complete such work. Knowing that quoted credentials and standards are on an “apples to apples” basis is a critical starting point. Because the differences are quite substantial, this subject must be addressed.

Minimum Appraisal Standards Should Be Followed

All appraisal work should comply with the Uniform Standards of Professional Appraisal Practice, or “USPAP.”  USPAP is promulgated by the Appraisal Foundation. Congress established the Appraisal Foundation in 1989 in connection with Title XI of the Financial Institutions Recovery and Enforcement Act (FIRREA).  This legislation gives a unit of the Appraisal Foundation responsibility to ensure that all certified appraisers meet certain qualifications, and that all appraisals for federally related transactions conform with USPAP.

Even if the federal government does not regulate the transaction, clients should insist that their appraisal work and reports comply with USPAP. Unfortunately, there are numerous people providing valuation services who are silent on the issue of USPAP compliance, and/or will attempt to convince you that USPAP is unnecessary. Some may not even know that standards exist.

Sponsors of the Appraisal Foundation include the Appraisal Institute, the American Society of Appraisers, and other appraisal organizations that have a more narrow and focused membership (e.g. farm appraisals, tax assessors, right of way appraisals). Generally, organizations sponsoring the Appraisal Foundation insist that their members follow USPAP, and will discipline any member that fails to do so. Importantly, some of the organizations that offer easy-to-obtain credentials (listed below) do not sponsor the Appraisal Foundation. These non-sponsoring organizations do not support USPAP.

Difficult To Obtain Credentials

The credentials that you should look for in your search for an appraiser include the following:

ASA (Accredited Senior Appraiser) – This is sponsored by the American Society of Appraisers. To obtain an ASA, one must:

1.    Have five years of verified full time experience doing appraisals in that discipline.

2.    Pass a comprehensive written examination involving appraisal theory and practice. The passage rate is modest.

3.    Pass an oral examination and screening.

4.    Have two actual appraisals pass a critical peer review. The reports are graded for technical competence, compliance with USPAP, and compliance with ASA’s Principles of Appraisal Practice and Code of Ethics.

5.    Have a four-year college degree.

6.    Provide client referrals and recommendations, which involve detailed investigation about the appraisal work performed.

7.    Take a standardized 15-hour course on USPAP and pass a written examination involving USPAP.

8.    Pass a written examination involving appraisal ethics.

For those who can meet all other requirements, but have not had five years of full-time appraisal experience, a person can receive the designation of AM (Accredited Member)

The ASA is the credential of choice, particularly in the appraisal of privately held businesses and intangible business assets, such as trade secrets, patents, trademarks, etc.

MAI (Member of the Appraisal Institute) – This is strictly a real estate credential, so everyone having this designation is a real estate appraiser.  The MAI is the credential of choice in real estate appraisal.  To obtain this credential, one must:

1.    Have two years experience as a real estate appraiser

2.    Pass a comprehensive written examination involving appraisal theory and practice. The passage rate is modest.

3.    Pass certain courses involving real estate appraisal

4.    Prepare a demonstration report that meets certain requirements Have a four-year college degree

5.    Take a standardized 15-hour course on USPAP and pass a written examination involving USPAP.

For appraisers performing only residential appraisals of 1-4 units, the Appraisal Institute offers the SRA designation. The SRA has fewer education and experience requirements, and no testing.

CFA (Chartered Financial Analyst) – This credential is sponsored by the CFA Institute (formerly the Association for Investment Management and Research or AIMR). The CFA Institute is not strictly an appraisal organization in that its members are primarily securities analysts, portfolio managers, investment bankers, and other investment consultants. However, the CFA is relevant to the appraisal field and is difficult to obtain. This is the credential of choice among public company stock analysts and other professionals listed above.

To obtain a CFA, one must pass three rigorous full-day examinations over a multi-year period. The exams cover a broad knowledge base, including the analysis and appraisal of closely held companies.

Credentials And Appraisals of Lower Stature

One will frequently see other credentials that claim to be of high quality. By analyzing the requirements, you will probably conclude otherwise. None of the following organizations insists that their members follow USPAP.

CVA (Certified Valuation Analyst) – A privately held, for-profit business sponsors this credential. To obtain a CVA, one must:

1.    Hold an unrevoked (but not necessarily active) CPA license.

2.    Complete this organization’s five-day training course.

3.    Pass a 4-hour exam, and complete a take home exam.  The passage rate for both exams is very high.

4.    Submit personal and business references.

In the event that these requirements are too difficult, the same organization sponsors a lesser credential. In order to get the AVA (Accredited Valuation Analyst), one must have an undergraduate degree instead of having an unrevoked CPA license.

CVAs and AVAs need not comply with USPAP in order to comply with rules of their sponsoring organization or to maintain their certificates. Most CVAs and AVAs do not follow USPAP.

ABV (Accredited in Business Valuation) – The American Institute of Certified Public Accountants (“AICPA”) sponsors this credential. The AICPA accurately noted that many CPAs were