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residential report writing and case studies > Chapter 1 Appraising vs Reporting > Flashcards

Chapter 1 Appraising vs Reporting Flashcards

1
Q

the act or process of developing an opinion of value; an opinion of value. (adjective) of or pertaining to appraising and related functions such as appraisal practice or appraisal services.

A

Appraisal

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2
Q

any communication, written or oral, of an appraisal or appraisal review that is transmitted to the client or a party authorized by the client upon completion of an assignment.

A

Report

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3
Q

The difference between Appraising and Reporting

A

An appraisal is an intellectual process, in which an appraiser forms an opinion of value. On the other hand, the appraisal report is the communication of the appraisal, or value opinion, which the appraiser has formed.

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4
Q 
The appraisal development process:
Is governed by Standard 2
Is an intellectual process
Must be reported in writing
Communicates the value opinion to the client
A

is an intellectual process

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5
Q 
The terms appraisal and report:
Are not synonymous
Are outdated and should not be used
Mean the same thing in USPAP
Both refer to the communication of the value opinion to the client
A

are not synonymous

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6
Q

For today’s residential real property appraiser, the appraisal development and reporting processes:
Have no relationship to one another
Are addressed in USPAP in one Standard
Sometimes seem to overlap due to reliance on form software
Should be completed on different days to avoid confusion

A

sometimes seem to overlap due to reliance on form software

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7
Q 
The reporting of a real property appraisal is the subject of:
USPAP STANDARD 1
USPAP STANDARD 2
USPAP STANDARD 3
None of these answers
A

USPAP STANDARD 2

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8
Q

There is no difference between the meanings of the terms appraisal and appraisal report.
True
False

A

false

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9
Q

Standard 1 of USPAP states:

A

In developing a real property appraisal, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses necessary to produce a credible appraisal.1

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10
Q

In reporting the results of a real property appraisal, an appraiser must communicate each analysis, opinion, and conclusion in a manner that is not misleading.

A

Standard 2

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11
Q

Intentionally or unintentionally misrepresenting, misstating, or concealing relevant facts or conclusions.

A

Misleading

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12
Q

The steps in the appraisal process include:

A
  1. Identification of the problem
  2. Determination of the scope of work
  3. Collection and analysis of the data
  4. Determination of highest and best use
  5. Application of the approaches to value
  6. Reconciliation
  7. Reporting of the appraisal
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13
Q

the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent

A

client

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14
Q

What is the reason for this appraisal?

A

Why is this appraisal needed? How is the appraisal going to be used? What sort of problem is this appraisal intended to solve?

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15
Q

In the development of a real property appraisal, the value opinion must be:
Affordable
A specific number
The average of the three comparable sales
Credible

A

credible

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16
Q

Maxine has developed a credible opinion of value on a vacant lot she is appraising. What is her next responsibility?
Properly communicate this opinion to the client
Forward an invoice for payment
Make sure her value opinion fits the client’s needs
Run an AVM on the property to see if her value opinion falls within an acceptable range

A

properly communicate this opinion to the client

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17
Q

Communication with the client is NOT important during the problem identification phase of an assignment.
True
False

A

false

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18
Q

the date to which an appraiser’s analyses, opinions, and conclusions apply; also referred to as date of value

A

effective

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19
Q

the date to which an appraiser’s analyses, opinions, and conclusions apply; also referred to as date of value

A

retrospective value opinion

20
Q

If the assignment is for a future effective date, the value would be

A

prospective

21
Q

To determine the appropriate scope of work for the individual assignment, the appraiser must:

A
  1. Rely on the information gained in the first step of the appraisal process. Proper identification of the problem is essential.
  2. Ensure that he or she has the knowledge, experience, and competency to accomplish this assignment.
  3. Determine the client’s expectations for this type of assignment.
  4. Not allow the assignment conditions to limit his or her ability to arrive at a credible opinion of value, given the intended use of the appraisal.
  5. Be able to support the decision for the level of work to be accomplished.
  6. Be prepared to defend the research and analysis he or she decided was not required for this assignment’s credible opinion of value.
22
Q

When an appraiser asks a client what type of value is needed in an appraisal assignment, what is he or she asking the client?
What is the value needed to make the loan?
How much do you think the property should appraise for?
What definition of value is to be used in the appraisal?
Is the appraisal fee going to be based on the value opinion?

A

what definition of value is to be used in the appraisal

23
Q 
When a property is appraised with an effective date that is some time in the future, this is a(n):
Retrospective appraisal
Prospective appraisal
Unacceptable assignment condition
Violation of USPAP
A

prospective appraisal

24
Q

What may happen if the client provides the appraiser with incorrect or incomplete property information?
The appraiser must withdraw from the assignment
A hypothetical condition may be necessary in the assignment
The appraiser may not be paid
A non-credible value opinion may result

A

a non-credible value opinion may result

25
Q

Some of the basic elements in the consideration of the highest and best use (HBU) of the subject include, but are not limited to:

A 
Supply and demand
Competition
Conformity
Site size
Building restrictions
Zoning requirements
Building codes
Market area trends
26
Q

In order to be considered the highest and best use for a property, the use must be:

A

Physically possible
Legally permissible
Financially feasible
Maximally productive

27
Q

The sales comparison approach is based primarily on the principles of

A

contribution and substitution

28
Q

The Cost Approach is also known as the

A

summation approach to value

29
Q

The principle of substitution is at work with which approach to value?

A

cost approach

30
Q

Age-life method:

A building has an effective age of 15 years and a total economic life of 60 years.

A

15 divided by 60 = 25% depreciation
Cost new of structure = $ 65,000
Subtract depreciation @ 25 % = ($16,250)
Depreciated value of structure = $ 48,750

31
Q

Highest and best use analysis is mandatory in all real property appraisal assignments.
True
False

A

false

32
Q 
Which of these is NOT one of the criteria for highest and best use?
Legally permissible
Physically possible
Socially acceptable
Financially feasible
A

socially acceptable

33
Q 
A home has an outdated kitchen, which can be remedied at a cost of $10,000. After the kitchen is updated, the value of the home will increase from $124,000 to $129,000. What type of depreciation is this?
Physical, incurable
Physical, curable
Non-functional, curable
Functional, incurable
A

functional, incurable

34
Q

Which principle is at work with the income approach?

A

principle of anticipation

35
Q

Reporting is the ____ step of the overall appraisal process

A

final

36
Q

Oral appraisal reports are recognized under USPAP; however this type of report is not permissible for mortgage lending appraisal assignments qualifying as

A

federally related transactions

37
Q

If the appraisal is intended for use in a federally related transaction, it must be presented in a

A

written report

38
Q 
The income approach is based on the principle of \_\_\_\_\_\_\_\_.
Substitution
Contribution
Anticipation
Externalities
A

anticipation

39
Q 
What type of income approach is typically used for small residential properties?
Gross rent multiplier
Capitalized value of rent loss
Discounted cash flow
Depreciated cost basis
A

gross rent multiplier

40
Q

Reconciliation is the process of averaging the indications of the approaches to value into a final value indication.
True
False

A

false

The appraiser should never simply average the value indications from the approaches to value into an opinion of value

41
Q 
What is the final step in the overall appraisal process?
Reporting the appraisal
Reconciliation
Highest and best use analysis
Invoicing
A

reporting the appraisal

42
Q

What is defined as the act or process of developing an opinion of value?
Evaluation
Appraisal report
Uniform Residential Appraisal Report (URAR)
Appraisal

A

appraisal

43
Q 
In order to solve the client's problem, appraisers must find answers to some basic questions
By the effective date of the appraisal.
at the time of engagement.
before the report is submitted.
Never
A

at the time of the engagement

44
Q 
The reporting of a real property appraisal is the subject of:
USPAP STANDARD 1
USPAP STANDARD 2
USPAP STANDARD 3
None of these answers
A

USPAP STANDARD 2

45
Q

Kristin develops an opinion of value, prepares it in a written format, and mails it to her client. What has she mailed to the client?
An appraisal
An appraisal review
A preliminary opinion of value, for which USPAP has no standards
A report

A

A report

46
Q

Highest and best use analysis is required in
all written appraisal assignments.
all market value appraisal assignments.
all investment value appraisal assignments.
it is never required

A

all market value appraisal assignments

residential report writing and case studies (10 decks)

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