Which statement is true regarding USPAP and the three approaches to value?

• A. An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.
• B. The appraiser must always develop all three approaches.
• C. Reconciliation is optional in some jurisdictions.
• D. Only the cost approach is required for all assignments.

Answer: (A)

Assignment conditions shape what an appraiser must do in USPAP. They are part of the engagement that can require the appraiser to develop or report in a way that goes beyond what the appraiser would normally consider. USPAP says you must analyze all approaches to value that are applicable to the assignment and the intended use. If a client places an assignment condition requesting an approach that the appraiser wouldn’t ordinarily develop, the appraiser must follow that condition and prepare that approach as part of the assignment. This is why the statement is true: the assignment condition can compel developing an approach that might otherwise be deemed unnecessary.

It isn’t required that every assignment include all three approaches, and reconciliation isn’t optional where multiple approaches are applicable; you reconcile the indications to arrive at the final value. Nor is the cost approach universally required for all assignments.