STANDARD 5.

In reporting the results of a real estate or real property consulting service, an appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading.

Comment: Standard 5 is identical in intent and purpose to the appraisal reporting requirements in Standard 2. An appraiser must explain logically and convincingly the reasoning that leads to his or her conclusions. The flow of information should be orderly and progressive, leading from the broadest to the most specific level of analysis possible. Those topics most critical to the consulting conclusions should receive the most detailed emphasis.

In many business situations involving consulting services, the role of the appraiser carries with it an implied impartiality. For this reason, an appraiser must exercise extreme caution in undertaking assignments that involve the achievement of the specific goals of a client. A clear and complete disclosure of the role being performed by the appraiser must be part of any written report that results from the acceptance of such an assignment. The disclosure must be stated in any letter of transmittal, statement of assumptions and limiting conditions, and executive summary. In this connection, the appropriate use of the Certification in Standards Rule 5-3 is also required, but it is not sufficient in and of itself. A timely and complete disclosure is required in any oral report.

Standards Rule 5-1.

Each written or oral consulting report must:

1. (a) clearly and accurately set forth the consulting service in a manner that will not be misleading;
2. (b) contain sufficient information to enable the person(s) who receive or rely on the report to understand it properly;

3. (c) clearly and accurately disclose any extraordinary assumption or limiting condition that directly affects the consulting service and indicate its impact on the final conclusion or recommendation (if any).

   Comment: Departure from binding requirements (a), (b), and (c) is not permitted. A consulting report must be sufficiently comprehensive so the client can visualize the problem and follow the reasoning through each step of the analytical process. It is essential that throughout the report the data, analyses, assumptions and conclusions are logical and adequately supported. Basic analytical and statistical principles, logical reasoning, and sound professional judgment are essential ingredients of the report.

   Standards Rule 5-2.

   Each written consulting report must comply with the following specific reporting guidelines:

4. (a) define the problems to be considered;
5. (b) state the purpose of the consulting service;
6. (e) identify and describe the real estate and/or property under consideration (if any);
7. (d) set forth the effective date of the consulting service and the date of the report;
8. (e) describe the overall range of work and the extent of the data collection process;
9. (f) set forth all assumptions and limiting conditions that affect the analyses, opinions, and conclusions;
10. (g) set forth the information considered, the consulting procedures followed, and the reasoning that supports the analyses, opinions, and conclusions;
11. (h) set forth the appraiser's final conclusions or recommendations (if any);
12. (i) set forth any additional information that may be appropriate to show compliance with, or clearly identify and explain permitted departures from, the requirements to Standard 4;

13. (j) include a signed certification in accordance with Standards Rule 5-3.

    Comment: the appraiser must set forth all the assumptions and limiting conditions under which the consulting service is made, and support their validity. Specific assumptions or conditions imposed by the client must be clearly set forth as part of the identification of the objective of the consulting service. The appraiser must investigate the validity of such assumptions or conditions and give reasons for finding them realistic.

    It is improper to omit any of the requirements from a consulting report transmitted to the client without good cause. Any departure from normal procedures and the effect of any unusual factors or conditions in connection with the problem must be explained. A misleading or fraudulent report violates the ETHICS PROVISION as well as the Standard.

    Standards Rule 5-3.

    Each written consulting report must contain a certification that is similar in content to the following form:

    I certify that to the best of my knowledge and belief:

    - the statements of fact contained in this report are true and correct.

    - the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions.

    - I have no (or the specified) present or prospective interest in the property (if any) that is the subject of this report, and I have no (or the specified) personal interest or bias with respect to the parties involved.

    - my compensation is not (or is) contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report. (If the compensation is contingent, the basis of such contingency must be disclosed in this certification and in any letter of transmittal and executive summary.)

    - my analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

    - I have (or have not) made a personal inspection of the property (if any) that is the subject of this report. (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal inspection of the property).

    - no one provided significant professional assistance to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated).

    Comment: Departure from this binding requirement is not permitted. To the extent that it is both possible and appropriate, each oral consulting report (including expert testimony) must address the substantive matters set forth in Standards Rule 5-2.