Facets of the art world have become more professionalized in the last several decades. As the industry has grown, so have subsidiary disciplines, including curatorial, conservation, and appraisal practice. As little as 30 years ago, an appraisal was commonly a one-page document, with line items for each artwork, a minimal description of the piece, and a dollar value. The Savings & Loan fall-out, of the late 1980s and early 90s, had a direct impact on appraisal practices, following the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
One of the many factors that contributed to the S&L crisis was the over-inflation of property by real estate appraisers. In a time when appraisers could charge for services in any manner they wished, many based their fee on the value of the appraised property. Not surprisingly, greed played a major role and numerous loans were issued (and defaulted on) for over-valued real estate. As a consequence, The Appraisal Foundation was formed in 1987 and wrote the Uniform Standards of Professional Appraisal Practice (USPAP), which outlines standards of the profession as well as a code of ethics for both real estate and personal property appraisers. The aforementioned reform act “recognizes USPAP as the generally accepted appraisal standards and requires USPAP compliance for appraisers in federal-related transactions.”1
When I began appraising in 2002, the USPAP examination was required every five (5) years in order to maintain the credential. As of 2011, the requirement is every two (2) years. My USPAP compliance indicates that I understand what is expected and required for a properly prepared IRS appraisal for tax purposes, whether related to a charitable gift of artwork, or for estate tax filing. In the event that an appraisal is challenged, a USPAP compliant appraisal will have far greater credence than an appraisal that does not meet the standards.
—Jennifer Stoots, AAA
*I am USPAP compliant and renew my credential every two years, as required.
1. “What is USPAP?” Appraisers Association of America