No New USPAP Revisions

By Leon Castner, ISA CAPP, Director of Education

Every time we see the passing of another year, we must consider whether any significant changes have been made in appraisal standards, either ISA or USPAP. Since USPAP is on a two-year cycle, any new revisions will be announced and become effective as of Jan. 1, 2016. That gives us a full year of relief from learning and practicing any changes.

That’s not to say that one should be unaware of communications given by The Appraisal Standards Board, since advisory opinions and notifications are provided on a frequent basis.

The last, for example, was on advice given about how one must state which approach or approaches to value/cost were used in a report and which one or ones weren’t. This guidance was delivered by way of an Oct. 28, 2014, “Q & A” announcement explaining the exclusion of approaches. It stated that simply stating “an approach was not developed” does not meet the USPAP requirement to explain why it was not developed. Stating that an approach was not necessary, without providing some basis for that opinion, fails to meet the definition of explain. The report must explain why an excluded approach is not necessary for credible results.

In another Q&A, the board commented on a question about the term “USPAP Certified.” Numerous advertisements and resumes seem to describe individuals who have completed the USPAP course as certified. The board said there is no such credential. The use of the expression “USPAP Certified Appraiser” is misleading. Completing a USPAP course does not entitle one to call oneself a USPAP Certified Appraiser.

Although we have commented on these issues and addressed them in Education Update newsletters, it is a welcome reinforcement of our earlier comments. So just because the current standards remain in effect for the upcoming year, it is a wise idea to keep your eyes and ears open for any clarifications or amplifications that may be issued.

Proud to Show Off

Libby Holloway, ISA CAPP

by Libby Holloway, ISA CAPP

I hope most of you have had the opportunity to check out A Guide to Appraising Fine Art, ISA’s new and improved manual for our Fine Art specialty course. Even though I am most definitely not an art appraiser, I have my very own copy, and have been reading through it. It is such a comprehensive guide to all aspects of art, including the prints we ARC appraisers see so much of. I believe even this stubborn old dog will learn something. It has already encouraged some of us to consider a few upgrades to the ARC manual.

A few years ago, many dedicated volunteers did a great job of updating the material in the manual. Everyone is still talking about their hard work and that of Kirsten Rabe Smolensky, ISA CAPP, who edited the entire manual. 

Because ISA has the advantage of using a print on demand publisher we are able to do another update to bring this manual up to the high bar set by the FA manual committee. Besides the branded ISA art on the cover, we will be including color photos and a few new chapters, including one on research skills. Our instructors, Micky Logan, ISA CAPP, Valerie Hale, ISA CAPP, and Todd Sigety, ISA CAPP, as well as Education Director Leon Castner, ISA CAPP, will be working on identifying lapses in content (Hey, I was one of the chapter authors and we can’t all be perfect all the time!) which will be addressed. Volunteer members will be working to make the changes to sections where they have superior knowledge. A few sections, such as the list of websites, will be excluded. It seemed like a good idea at the time, but Internet changes happen too quickly to be included in the print copy of the manual. An alternate list, which can be updated frequently, will be made available on the forum. 

Our organization is recognized as an industry leader in education due to the high standards of our educational offerings and supporting materials. Board members and staff are taking your ideas and turning them into more and better content. Some of our Affinity Business Partners have even offered webinars to our members, such as the one presented by Eli Wilner recently. We have plans to exchange webinar content with some of these partners. The ones we offer will educate their staffs on what ISA appraisers have to offer them and their clients. 

Speaking of good ideas from our members, if anyone, especially new ARC course graduates, have comments or suggestions for the manual update, please let me know. I’d welcome your emails to libby@LibbyHollowayAppraisals.com. 

Growing and Propelling Your Appraisal Practice - Part 1: Time and Gatekeepers

By Cindy Charleston-Rosenberg, ISA CAPP, President

Dost thou love life? Then do not squander time, for that is the stuff life is made of - Benjamin Franklin

Cindy Charleston-Rosenberg,
ISA CAPP, President

Appraisers are adept number crunchers. Simple math tells us that if we multiplied the number of hours we are (or would like to be) appraising by the hourly fee we deserve, we'd all be flourishing. 

Professionals who provide an expert service: doctors, lawyers and appraisers, quickly find that achieving a meaningful credential and hanging out a shingle does not automatically drive business to our door. What we need to prosper is enough knowledgeable clients, who value our time and expertise and less time wasted attracting and convincing them.

Effectively identifying, cultivating and maintaining relationships with repeat sources of referrals is a key element of a strong business model for professional service providers. "Gatekeepers" who understand the unique service you provide, refer vetted clients who are more likely to be comfortable fairly compensating your time and expertise.  For appraisers, gatekeepers can be insurance brokers, financial planning professionals, attorneys, museum registrars and auction houses.

Positioning Your Credential and Unique Approach

It's important to "position" your services above less qualified appraisers. To do so, be clear in your messaging about what you are uniquely capable to offer clients of referral sources. Living in a large city provides more opportunities to attract and cultivate gatekeepers, but even the smallest rural town has at least one estate attorney and insurance broker, an antique shop or art gallery, and possibly even an auction house looking to refer out their insurance appraising to someone who will handle their clients professionally.

Help from ISA - Effective Marketing Tools
Existing, In Development and at Conference in Philly

ISA has invested time and resources to help members promote their practices more efficiently by providing a comprehensive array of professionally designed marketing materials. We hope these will assist member efforts to position our unique credential with prospective clients and gatekeepers. 

•    ISA Marketing Products: A broad range of customizable marketing products may be found on the Member Resources link on the Membership tab on our webpages. These include: A recent re-design of ARC and Fine Art versions of the “Be Certain of its Value” brochure, co-op ads, and an adaptable, 100+ slide PowerPoint presentation developed to support member speaking engagements.

•    ISA Webinars: Free ISA Webinars on business development can be found on our Learning Management Platform. They include: Jump Starting Your Appraisal Practice, Social Media for the Appraiser, and Internet Marketing Tools for the Appraiser. Go to: http://www.isa-appraisers.org/education/webinars/8/business-development#webinars

•    From Your Fellow Members: ISA appraisers are the most generous in the industry.  Our unique collaborative culture pools a broad range of expertise in a spirit that is unparalleled. Consider reaching out to fellow members with similar skills or expertise for support on specific business questions, or post your question to the Forum. You will be amazed by the generous mentorship of our membership. On the flip side, if you have a business building strategy that has worked and would like to share with your ISA colleagues, please email me at info@artappraisalfirm.com. We will be consolidating your suggestions for a future post. 

•    In Development: An ISA client-oriented Newsletter, focused on educational content of interest to gatekeepers and prospective and existing appraisal clients. Thought leadership positions you as an appraisal expert, and has the potential to be more effective in building credibility than direct promotion. Available by Conference, the ISA Client Newsletter will be customizable for your photograph, bio and contact information. Like other ISA promotional materials, the Newsletter will be available to print and mail, or convert to PDF and email, directly from our webpages. 

•    At Conference: Shelly Berman-Rubera Founder and President of Small Business Results, and a certified Small Business Coach, is presenting at our closing Brunch on Monday. Her presentation, Growing and Propelling Your Appraisal Business Revenue is specifically crafted for ISA members, and incorporates her 6 Step Program to Small Business Results, with ISA promotional materials. Shelly will offer creative, effective solutions to our unique promotional challenges, will offer time-saving practices and strategies, and promises to "rock your world' regarding how you currently think about growing your appraisal business.

Small business solutions expert Shelly Berman-Rubera has crafted a presentation specifically for ISA appraisers and will be presenting at Assets 2015. Don't miss this unique opportunity to propel your appraisal practice while learning time-efficient practices and strategies.

ISA's advanced methodology training and testing, coupled with a culture that encourages shared expertise has produced the most meaningful credential in the industry. Over the past several years ISA has been engaged in a directed campaign to raise the profile of the ISA appraiser and professionally position the ISA credential. We hope you find the tools we have developed to be effective in both obtaining fair compensation as well as fair market share.

This blog is one of a three-part series of ISA NOW posts on business development. Stay-tuned for Part 2: A Business Design for Appraisal Success, and Part 3: Unique Business Challenges for Appraisers and Underlying Opportunities. 

Appraise the Stone, Not the Paper

By August Monteleone, ISA

The end of this article contains a response by grader, Paul Cassarino, ISA CAPP

In the diamond industry, there is an often-repeated adage, “Buy the stone, not the paper.” This refers to the fact that a diamond grading report does not tell you everything you need to know about a stone. More important, though, is the fact that some labs are more lenient on grading than others; to the point that consumers have filed several lawsuits against diamond sellers, citing deceptive practices.

One lab in question is EGL International whose reports have been de-listed by the Rapaport Diamond Network and Polygon Wholesale Jewelry Trading Network, two of the largest dealer-to-dealer diamond trading platforms (Rapaport also de-listed EGL-USA, a separate entity from EGL International, but Polygon did not). The major problem with the lax grading from some labs is the fact that they all use the terminology of the Gemological Institute of America (GIA).

When Talking about GIA terminology, what I’m referring to is the four C’s, as well as other information, like polish, symmetry and florescence. All of the reports use the GIA terms for color (or the D-Z scale), clarity - Flawless (FL) – Included 3 (I3). Though some include the clarity of Slightly Included 3 (SI3) – the GIA does not use this term. The Carat scale is the standard for weight then the cut (Only on rounds for GIA since about 2006), Polish and symmetry are communicated on a scale from Excellent to Poor and florescence is graded from None to Very Strong.

Since all of these labs use this terminology, you would think that a diamond graded as a D color by EGL International would be the same as a GIA graded stone when, in fact, that very same diamond was graded a G color by the GIA. *This example was taken from a 10 stone survey conducted by Rapaport news published in a June 2013 Article Grading the Graders by Avi Krawitz. In that survey, there were differences in every category listed above except for Carat weight, with variances of several grades on some samples.

The lawsuits that brought this issue to the public’s attention are against Genesis Diamonds in Tennessee. One case in particular involves the accompanying appraisal (though I use the term “appraisal” very loosely). In that case, the Plaintiff paid $21,293.00 for a ring ($3500.00 for setting and $17793.00 for the diamond) with an EGL International Graded 2.06ct. G color VS2 clarity diamond that was appraised by the seller for $27,500.00 (setting and diamond). The diamond was later graded by GIA and came back with a J color and SI2 clarity. This suit was settled out of court and records of the settlement are undisclosed.

These kinds of discrepancies from grading labs must be taken into account when doing an appraisal on diamond jewelry. Personally, I do not currently appraise diamonds or gemstones, even though I deal in them on a daily basis and have the competency to do so. The reason I do not appraise these items is because I have not yet finished my GIA classes. Until I obtain those credentials, I believe it leaves too much room for my valuations to be contested, which would be a disservice to my clients. The ISA has many competent and experienced jewelry appraisers among its membership. These professionals have spent countless hours and dollars on education and equipment in order to accurately appraise jewelry items. I strongly urge non-jewelry professionals to consult them when encountering fine jewelry in an appraisal assignment.

Sources and further reading:

• Polygon Trading Network – Announcements and forum discussions
• Jewelers' Circular Keystone JCK:
• http://www.jckonline.com/2014/09/09/rapnet-bans-egl-reports-from-trading-network
• http://www.jckonline.com/2014/09/15/polygon-bans-egl-intl-reports-from-network
• http://www.jckonline.com/blogs/cutting-remarks/2014/09/09/carrying-lenient-diamond-grading-reports-actionable-talk-genesis-nemesis
• http://www.jckonline.com/2014/10/03/lawsuit-over-grading-reports-settled
• Rapaport News: http://www.diamonds.net/News/NewsItem.aspx?ArticleID=43417
• Rapaport Magazine: November 2014 Cover story, Honest Grading by Martin Rapaport.

Response from Paul Cassarino, ISA CAPP, and grader

The article is accurate. The additional information I would provide to appraisers reading this would be to not disregard the active market for EGL-graded diamonds. They are bought and sold every day.

If presented a diamond for appraisal that is accompanied by a diamond grading report from EGL, then the value research MUST be based on sales of EGL-graded diamonds. Because EGL labs are franchised, research MUST be done on diamonds graded by the very same franchise. Some franchises are regarded more positively than others. The diamond industry heavily discounts diamonds with EGL reports because of the widespread understanding of their often mis-use of the GIA grading standards. It is a serious mistake to value a diamond with EGL papers by research of GIA-graded diamonds. In the absence of adequate data for sales of diamonds graded by the same franchise, it is the appraiser's responsibility to grade the diamond according to their training and do their research based on those findings. (Just as they would if there were no documentation provided by the client.) They MUST disclose their findings within the report and explain their value methodology. Without being libelous, the appraiser can accurately reflect their methodology...their research of the EGL-graded diamond was based on the sales of (or price in the store of...) a similarly documented diamond i.e., diamonds graded by the same lab franchise.