Chapter 1 Appraising vs Reporting

Question 1

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.

Answer 1

Appraisal

Question 2

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.

Answer 2

Report

Question 3

The difference between Appraising and Reporting

Answer 3

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.

Question 4

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

Answer 4

is an intellectual process

Question 5

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Are outdated and should not be used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

Answer 5

are not synonymous

Question 6

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

Answer 6

sometimes seem to overlap due to reliance on form software

Question 7

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

Answer 7

USPAP STANDARD 2

Question 8

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

Answer 8

false

Question 9

Standard 1 of USPAP states:

Answer 9

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

Question 10

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.

Answer 10

Standard 2

Question 11

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

Answer 11

Misleading

Question 12

The steps in the appraisal process include:

Answer 12

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

Question 13

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

Answer 13

client

Question 14

What is the reason for this appraisal?

Answer 14

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

Question 15

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

Answer 15

credible

Question 16

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

Answer 16

properly communicate this opinion to the client

Question 17

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

Answer 17

false

Question 18

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

Answer 18

effective

Question 19

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

Answer 19

retrospective value opinion

Question 20

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

Answer 20

prospective

Question 21

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

Answer 21

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.

Question 22

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?

Answer 22

what definition of value is to be used in the appraisal

Question 23

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

Answer 23

prospective appraisal

Question 24

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

Answer 24

a non-credible value opinion may result

Question 25

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

Answer 25

``` Supply and demand Competition Conformity Site size Building restrictions Zoning requirements Building codes Market area trends ```

Question 26

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

Answer 26

Physically possible Legally permissible Financially feasible Maximally productive

Question 27

The sales comparison approach is based primarily on the principles of

Answer 27

contribution and substitution

Question 28

The Cost Approach is also known as the

Answer 28

summation approach to value

Question 29

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

Answer 29

cost approach

Question 30

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

Answer 30

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

Question 31

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

Answer 31

false

Question 32

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

Answer 32

socially acceptable

Question 33

``` 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 ```

Answer 33

functional, incurable

Question 34

Which principle is at work with the income approach?

Answer 34

principle of anticipation

Question 35

Reporting is the ____ step of the overall appraisal process

Answer 35

final

Question 36

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

Answer 36

federally related transactions

Question 37

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

Answer 37

written report

Question 38

``` The income approach is based on the principle of ________. Substitution Contribution Anticipation Externalities ```

Answer 38

anticipation

Question 39

``` 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 ```

Answer 39

gross rent multiplier

Question 40

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

Answer 40

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

Question 41

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

Answer 41

reporting the appraisal

Question 42

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

Answer 42

appraisal

Question 43

``` 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 ```

Answer 43

at the time of the engagement

Question 44

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

Answer 44

USPAP STANDARD 2

Question 45

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

Answer 45

A report

Question 46

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

Answer 46

all market value appraisal assignments