USPAP Q&A addresses AI

BVWireIssue #256-4
January 31, 2024

appraisal standards and regulations
business valuation profession, due diligence, practice management, information technology

AI tools are not a substitute for an appraiser’s judgment. That’s one of the main takeaways from a recent series of Q&As regarding the Uniform Standards of Professional Appraisal Practice (USPAP). Regardless of whether a valuation expert is required to comply with USPAP, it contains some useful information. In the new Q&As, this question was posed: “What is an appraiser’s USPAP obligations when using artificial intelligence (AI) in an appraisal assignment?”

Reliance: “When using a computer assisted valuation tool, an appraiser must not simply rely on the output of technology without an understanding that the output is credible,” says the response. This also goes for the use of a chatbot tool (which, as we’ve seen, can “hallucinate”).

Confidentiality: AI tools can also cause an appraiser to run afoul of USPAP’s confidentiality rules with respect to client information. “Although an AI chatbot is not a person, creating an inquiry with a chatbot that includes confidential information may allow the chatbot to capture that information for responses to inquiries by other human users, or the chatbot developers.”

Additional USPAP guidance on this issue can be found in Advisory Opinion 18, Use of an Automated Valuation Model (AVM), and Advisory Opinion 37, Computer Assisted Valuation Tools in the Guidance and Reference Manual (GRM). USPAP is administered by The Appraisal Foundation (TAF), which has a task force that examines automated valuation models and has issued two white papers on the subject

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