Competency Rule
A USPAP rule requiring that an appraiser must have the knowledge and experience necessary to complete an assignment competently, or must take steps to acquire it before accepting the assignment.
The Competency Rule applies to every appraisal assignment. If an appraiser lacks the geographic competency, property type experience, or analytical skills needed for a particular assignment, they must either decline the assignment, associate with a qualified appraiser, or complete additional education and research before accepting it. The appraiser must disclose any lack of competency and the steps taken to address it. This rule is particularly relevant when appraising unusual property types, unfamiliar markets, or using unfamiliar valuation techniques.
Related Terms
Uniform Standards of Professional Appraisal Practice (USPAP)
USPAPThe nationally recognized ethical and performance standards for the appraisal profession, established by The Appraisal Foundation.
Scope of Work
The type and extent of research and analysis performed in an appraisal assignment.
USPAP Ethics Rule
The USPAP rule establishing requirements for appraiser conduct, management, confidentiality, and record keeping.
Geographic Competency
An appraiser's knowledge of and experience with a specific market area, including familiarity with local market conditions, comparable sales, neighborhood boundaries, and value influences.
More in Legal & Regulatory
View allFIRREA (Financial Institutions Reform, Recovery, and Enforcement Act)
FIRREAThe 1989 federal law that established the modern appraisal regulatory framework, requiring state licensing of appraisers and USPAP compliance for all federally related real estate transactions..
Dodd-Frank Act (Appraisal Provisions)
The 2010 federal financial reform law that included significant appraisal provisions: appraiser independence requirements, AMC registration, customary and reasonable fee mandates, and prohibition of BPOs for origination..
Appraiser Independence
The legal requirement that appraisers must be free from improper influence, coercion, or pressure from parties with a financial interest in the transaction outcome.
The Appraisal Foundation
The Congressionally authorized organization that sets appraisal standards (USPAP) and minimum appraiser qualification criteria.