12 Ch2 Advanced Residential Appraisal Concepts quiz Flashcards
What is the purpose of USPAP?
Promote and maintain public trust
If an appraiser determines he or she lacks necessary knowledge or experience to competently complete an assignment, the appraiser
May still accept the assignment. The appraiser may still accept the assignment, but must fulfill his/her obligations under USPAP. He/she must notify the client of the lack of knowledge and experience, take whatever steps are necessary to obtain competency, and disclose in the report the appraiser’s initial lack of knowledge and experience and the steps taken to obtain competency. It is not mandatory that the appraiser seeks the assistance of another appraiser, but this is often done. Ch 2, The COMPETENCY RULE
If the appraiser discovers that he or she lacks necessary knowledge or experience after having accepted the assignment
The appraiser must notify the client
If an appraisal assignment cannot be completed competently
The appraiser must turn down or withdraw from the assignment
An appraiser is offered an appraisal assignment which he knows is beyond his level of competency. He must notify the client of any lack of necessary knowledge or experience
Prior to accepting the assignment. Remember this applies to BOTH a situation where you know before accepting the assignment AND to a situation where you discover after accepting the assignment. If you know before you accept the assignment, you must disclose and let the client decide whether to permit you to proceed. If you discover after accepting the assignment, you must stop, notify the client, then, if the client decides to let you proceed, you must gain the competence and include in the appraisal report the required disclosures. (Chapter 2)
State enforcement agencies report that one of the most common violations of USPAP is
Failure to properly complete the appraisal of a 2-4 unit property
Once an appraiser has orally notified the client of any lack of necessary knowledge or experience
It is still necessary to disclose this in the appraisal report
The five basic rules of USPAP, which cover all of appraisal and appraisal review assignments, include all of the following
JURISDICTIONAL EXCEPTION RULE, COMPETENCY RULE, SCOPE OF WORK RULE, The RECORDKEEPING RULE (not Communication rule, not confidentiality rule)
The COMPETENCY RULE is relevant to
The appraisal of all kinds of properties
An appraiser might overcome a lack of necessary knowledge or experience by
Seeking the assistance of another appraiser
Which statement is most likely TRUE regarding a property that is sold with special low-interest below-market financing?
Its sale price will probably be higher than its market value
A scope of work that is appropriate for an appraisal used for mortgage lending would also be appropriate for use in an appraisal for litigation.
FALSE
Why is it important to identify the intended use of an appraisal?
It is essential in making the scope of work decision
When the appraiser believes something directly related to a specific assignment to be true, but there is some degree of uncertainty, he or she must employ
An extraordinary assumption
What is the first step in the appraisal process?
Problem identification
Most definitions of market value require an appraiser to value the property
With no unusual or atypical financing terms, Based on financing terms equivalent to cash, With no unusual or atypical concessions
You are appraising a single-family home for a mortgage lender. At the property, you find that there is a leaking oil storage tank on the property. What should you do?
Notify the client about the problem as soon as is feasible
Most appraisal assignments are based on a _______ effective date.
Current
You are appraising a single-family home for a local mortgage lender. When inspecting the property, you discover that the inside of the home has been gutted down to the studs. When should you notify your client about the condition of the property?
As soon as you discover it
In order to determine competence, the appraiser must complete
The problem identification process
When an appraiser, in appraising a property, supposes something to be true which is actually known to be false, this is
A hypothetical condition
Your appraiser friend Paul wants to use a “non-traditional” technique to value a complex property. What advice would you give him?
Explain the technique and why the appraiser believes it is appropriate
The SCOPE OF WORK RULE states that appraisers have broad _______ and significant ________ in determining the scope of work.
Flexibility, responsibility
The appraiser’s scope of work is acceptable when it meets or exceeds the expectations of
Parties who regularly use similar assignments
Scope of work includes
The extent of the property inspection, The type and extent of data research, The type and extent of analyses applied, The extent to which the property is identified. It does not include The type of appraisal report option used.
The appraiser’s scope of work is acceptable when it meets or exceeds what his/her peers’ actions would be in performing
The same or similar assignment
In the appraisal of a complex property, who is responsible for making appropriate decisions necessary to produce a credible appraisal?
The appraiser
“Worthy of belief” is the USPAP definition for
Credible
The appraiser’s scope of work can be determined only through completion of
The problem identification process
How is the credibility of assignment results measured?
Within the context of the intended use
An appraiser is engaged to value a single-family home for a mortgage refinance. When the appraiser arrives at the property, she realizes it is an operating restaurant. The appraiser contacts the client. What is the MOST likely outcome?
The assignment will be cancelled
Appraiser Anne is asked to appraise a property, however the client places conditions on her information gathering process that will not allow her to develop credible results. The client will not allow her to modify the scope of work, and will not allow her to use an extraordinary assumption about the information she is unable to obtain. What must Anne do under USPAP?
Withdraw from the assignment
Where does an appraiser typically obtain most of the information necessary for problem identification?
Communication with the client
Which statement is TRUE regarding the pre-printed scope of work statement that appears on the Fannie Mae URAR report form?
It is a minimum
According to the Scope of Work Rule, for each appraisal or appraisal review assignment, an appraiser must:
Identify the problem to be solved, Determine and perform the scope of work necessary to develop credible assignment results, Disclose the scope of work in the report
When an appraiser, in appraising a property, supposes something to be true which is actually known to be false, this is
A hypothetical condition
While most appraisers understand the need for completing assignments competently, many do not understand that the COMPETENCY RULE can also be used as:
An escape clause
Assignment conditions include all of the following
Assumptions, Extraordinary assumptions, Jurisdictional exceptions
What rule dictates that you must to be competent to perform the assignment?
The Competency Rule. That is, you must have the necessary knowledge and experience to perform the assignment competently, prior to accepting the assignment. At least, that is “Plan A”. (Ch. 2, The COMPETENCY RULE)
The scope of work is acceptable when it meets or exceeds:
The expectations of parties who are regularly intended users for similar assignments. What an appraiser’s peers’ actions would be in performing the same or a similar assignment
