The Canadian Uniform Standards of Professional Appraisal Practice, commonly referred to as CUSPAP, serves as the guiding framework for real estate appraisers in Canada. This comprehensive set of standards outlines the ethical and professional obligations appraisers must adhere to when conducting property valuations. In this article, we will delve into a specific aspect of CUSPAP concerning stand-alone home inspections, particularly focusing on the challenges posed by unprecedented situations such as the COVID-19 pandemic.
Professional Excellence Bulletins and Stand-Alone Home Inspections PEB
CUSPAP provides ongoing guidance through Professional Excellence Bulletins (PEBs), which address specific issues and challenges faced by appraisers. One notable PEB pertains to Stand-Alone Home Inspections, emphasizing the mandatory nature of inspecting both the exterior and interior of a subject property. However, the document acknowledges that extraordinary limiting conditions may sometimes hinder a full inspection.
Overcoming Limiting Conditions: Interior Inspection Challenges
A common question that arises, especially in the context of the COVID-19 pandemic, is how to conduct an interior inspection when access to the subject property is restricted. This could be due to reasons such as the occupant testing positive for COVID-19 or other factors like matrimonial disputes or foreclosures.
In such instances, CUSPAP acknowledges the necessity of a full inspection but recognizes that limited and exceptional circumstances may necessitate alternative approaches. A member of the appraisal profession can complete a comprehensive appraisal report even with a restricted inspection, provided the circumstances are genuinely exceptional.
Alternative Sources of Information
CUSPAP offers a range of alternative sources that appraisers can leverage when facing challenges in performing personal exterior and interior inspections. These alternatives include:
Limited Personal Interior Inspection: When a partial interior inspection is feasible.
Virtual Interior Inspection: Utilizing remote technology for a virtual walkthrough.
Owner/Occupant Provided Photos: Relying on interior photos provided by the owner or occupant.
Third-Party Photos: Using recent and reliable photos from MLS or other third-party sources.
Client or Owner Information: Incorporating information describing the physical characteristics of the property.
Assessment Information: Utilizing data from property assessments.
However, it is crucial for appraisers to exercise due diligence in verifying the reliability of third-party information used to formulate the estimated property value in their reports.
Documenting Extraordinary Conditions and Assumptions
If a full inspection (both exterior and interior) is not feasible due to extraordinary limiting conditions, CUSPAP mandates the inclusion of an Extraordinary Limiting Condition in the appraisal report. Additionally, appraisers must employ Extraordinary Assumptions and clearly state their sources, providing a comprehensive explanation in both the transmittal letter and the scope of the report.
Adhering to CUSPAP Standards
Above all, appraisers are reminded of their responsibility to adhere to CUSPAP, particularly the Scope of Work standard (CUSPAP 7.5.1) and to meet the Reasonable Appraiser test. In challenging times, such as those presented by the COVID-19 pandemic, CUSPAP provides a flexible yet principled approach, ensuring that appraisers can navigate the complexities of stand-alone home inspections while upholding the highest professional standards.
As the real estate landscape continues to evolve, CUSPAP remains a steadfast guide for appraisers, offering a reliable framework to maintain professionalism and integrity in the appraisal process.
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