Does USPAP demand precision?  This is a question few appraisers have raised, so there is no specific answer to it. USPAP itself uses the word precision just once, in AO-23, but in the context of a discounted cash flow analysis.  It uses precise only four times.  But only one of those is in Standard 1.  None of them is in Standard 2.  And its use in Standard 1 is in the context of a precise definition of value.  USPAP does not use the term in the context of the value opinion itself.

But, does USPAP demand precision anywhere in Standard 2 (the report writing standard), in any context?  Directly, no it does not.  However, SR2-1 demands the appraisal report be clear and accurate so that it is not misleading.  That same SR also makes it clear the client and the intended user(s) must be able to “…understand the [appraisal] report properly…” no matter the reporting format.  So, in an off-handed manner, USPAP does demand precision, although that call could be clearer and more emphatic.

So, the question, “Does USPAP Demand Precision?” raises another question:  “What is precise?”, which this podcast’s purpose is to illustrate with a series of questions.    For example, in twenty (-20-) words or less, answer this question:  “In the final reconciliation, why did sale-X deserve more weight than sale-Y?”  Here is another one:  “In twenty (-20-) words or less, explain why appraisers develop value opinions, rather than provide estimates of value”.   There are so many more.

“Does USPAP Demand Precision?” may be too emphatic.    Perhaps a more applicable question is, “Does USPAP Encourage Precision?”  Given what Standard 2 says about not misleading the client, about writing the report so it is easy to understand, it looks as if the answer is in the affirmative.  So, why is it that we appraisers should write precisely?  (In the podcast, I mention Einstein’s E=MC-squared formula.  Here is an explanatory link).