Ever felt confused about the appraisal / valuation terms “purpose” and the “intended use”? Join the club! The difficulty is historical. The Uniform Standards of Professional Appraisal Practice (USPAP) officially re-purposed the turn “purpose” in the 2005 edition, explaining that
Edits were made throughout the document [USPAP] regarding the term purpose, due to its varied intended meanings. The edits result in more accurate language, including use of the terms type and definition of value, intended use, and problem to be solved.
As late as 2017, the International Valuation Standards (IVS) definition of the term “purpose” seemed synonymous with USPAP’s intended use:
IVS 20.19: The word purpose refers to the reason(s) a valuation is performed. Common purposes include (but are not limited to) financial reporting, tax reporting, litigation support, transaction support, and to support secured lending decisions.
While the 2025 IVS continues to use “purpose” throughout the narrative, the term is no longer defined as “the reason [for] a valuation” but has been folded into the definition of “Intended Use:”
IVS 10.12 Intended Use: The reason(s) for which a value is developed as described in the scope of work. This is also known as intended purpose.
Understanding Purpose & Intended Use
On a recent Appraiser Talk podcast with The Appraisal Foundation, I discussed the distinction between the two terms with Lisa Desmarais and Amy Timmerman as we answered the Episode 178 question:
Can you tell us the history of the terms “purpose” and “function” in USPAP and how that relates to intended use?
Listen to the short podcast interview here or read the 2-page article – Clarifying Terminology: Purpose, Intended Use, and Definition of Value in the ARM E-Journal, official publication of ASA Appraisal Review & Management Discipline.
Here’s the abstract to get you started:
This article clarifies the distinctions between the terms purpose, intended use, and definition of value in the context of appraisal practice, addressing common confusions and providing insights from industry expert Barry Shea, ASA. It delves into the historical evolution of these terms from pre-USPAP practices to their current interpretations within the Uniform Standards of Professional Appraisal Practice (USPAP) and the International Valuation Standards (IVS). The article emphasizes the importance of using standardized terminology to ensure clarity and consistency in appraisal reports and reviews.
Learn More
Interesting in learning more about other valuation or appraisal terms? You might enjoy our recent post regarding an addition to the machinery & equipment valuation lexicon. Or click on the “equipment appraisal terms” tag at the end of this post for an assortment of articles on the topic.
Jack Young, ASA—MTS/ARM, CPA
NorCal Valuation Inc.
