STANDARD 7
STANDARD 7: PERSONAL PROPERTY APPRAISAL, DEVELOPMENT
In developing a personal property appraisal, an appraiser must identify the problem to be solved,
determine the scope of work necessary to solve the problem, and correctly complete research and
analyses necessary to produce a credible appraisal.
Comment: STANDARD 7 is directed toward the substantive aspects of developing a credible
appraisal of personal property. The requirements set forth in STANDARD 7 follow the
appraisal development process in the order of topics addressed and can be used by appraisers
and the users of appraisal services as a convenient checklist.
Standards Rule 7-1
In developing a personal property appraisal, an appraiser must:
(a) be aware of, understand, and correctly employ those recognized methods and techniques that are
necessary to produce a credible appraisal;
Comment: This Standards Rule recognizes that the principle of change continues to affect the
manner in which appraisers perform appraisal services. Changes and developments in
personal property practice have a substantial impact on the appraisal profession. Important
changes in the cost and manner of acquiring, producing, and marketing personal property and
changes in the legal framework in which property rights and interests are created, marketed,
conveyed, and financed have resulted in corresponding changes in appraisal theory and
practice. Social change has also had an effect on appraisal theory and practice. To keep
abreast of these changes and developments, the appraisal profession reviews and revises
appraisal methods and techniques and develops methods and techniques to meet new
circumstances. For this reason, it is not sufficient for appraisers to simply maintain the skills
and the knowledge they possess when they become appraisers. Each appraiser must
continuously improve his or her skills to remain proficient in personal property appraisal.
(b) not commit a substantial error of omission or commission that significantly affects an appraisal;
and
Comment: An appraiser must use sufficient care to avoid errors that would significantly affect
his or her opinions and conclusions. Diligence is required to identify and analyze the factors,
conditions, data, and other information that would have a significant effect on the credibility
of the assignment results.
(c) not render appraisal services in a careless or negligent manner, such as by making a series of
errors that, although individually might not significantly affect the results of an appraisal, in the
aggregate affect the credibility of those results.
Comment: Perfection is impossible to attain, and competence does not require perfection.
However, an appraiser must not render appraisal services in a careless or negligent manner.
This Standards Rule requires an appraiser to use due diligence and due care.
Standards Rule 7-2
In developing a personal property appraisal, an appraiser must:
(a) identify the client and other intended users;79 1738
(b) identify the intended use of the appraiser’s opinions and conclusions;80
Comment: An appraiser must not allow the intended use of an assignment or a client’s
objectives to cause the assignment results to be biased.
(c) identify the type and definition of value, and, if the value opinion to be developed is market
value, ascertain whether the value is to be the most probable price:
(i) in terms of cash; or
(ii) in terms of financial arrangements equivalent to cash; or
(iii) in other precisely defined terms; and
(iv) if the opinion of value is to be based on non-market financing or financing with unusual
conditions or incentives, the terms of such financing must be clearly identified and the
appraiser’s opinion of their contributions to or negative influence on value must be
developed by analysis of relevant market data;
Comment: When developing an opinion of value in a specified market or at a specified market
level based on the potential sale of the property, the appraiser must also develop an opinion of
reasonable exposure time linked to the value opinion.
(d) identify the effective date of the appraiser’s opinions and conclusions;81
(e) identify the characteristics of the property that are relevant to the type and definition of value
and intended use of the appraisal,82 including:
(i) sufficient characteristics to establish the identity of the item including the method of
identification;
(ii) sufficient characteristics to establish the relative quality of the item (and its component
parts, where applicable) within its type;
(iii) all other physical and economic attributes with a material effect on value;
Comment: Some examples of physical and economic characteristics include condition, style,
size, quality, manufacturer, author, materials, origin, age, provenance, alterations, restorations,
and obsolescence. The type of property, the type and definition of value, and intended use of
the appraisal determine which characteristics have a material effect on value.
(iv) the ownership interest to be valued;
(v) any known restrictions, encumbrances, leases, covenants, contracts, declarations, special
assessments, ordinances, or other items of a similar nature; and
79 See Statement on Appraisal Standards No. 9, Identification of Intended Use and Intended Users.
80 See Statement on Appraisal Standards No. 9, Identification of Intended Use and Intended Users.
81 See Statement on Appraisal Standards No. 3, Retrospective Value Opinions, and Statement on Appraisal Standards No. 4, Prospective
Value Opinions.
82 See Advisory Opinion 2, Inspection of Subject Property.
(vi) any real property or intangible items that are not personal property but which are
included in the appraisal;
Comment on (i)–(vi): The information used by an appraiser to identify the property
characteristics must be from sources the appraiser reasonably believes are reliable.
An appraiser may use any combination of a property inspection and documents or other
resources to identify the relevant characteristics of the subject property.
When appraising proposed modifications, an appraiser must examine and have available for
future examination, plans, specifications, or other documentation sufficient to identify the
extent and character of the proposed modifications.
An appraiser may not be required to value the whole when the subject of the appraisal is a
fractional interest, a physical segment, or a partial holding.
(f) identify any extraordinary assumptions necessary in the assignment;
Comment: An extraordinary assumption may be used in an assignment only if:
