Chapter 2 Flashcards
Standard 2 of USPAP established the ____ requirements for real property appraisal reports.
Minimum
USPAP requirements are for _________ UPAP does not dictate the form, format, or style of an appraisal report.
report content.
There are ____ Standards Rules in Standard 2.
4
Standards rule 2-1 states:
- will not be misleading
- Contain sufficient information to enable intended users to understand the report.
- **Clearly and Accurately **disclose all
assumptions,
extraordinary assumptions,
hypothetical conditions,
limiting conditions
Standards Rule applies to both written and oral real property appraisal reports.
True/False
True
Standard Rule 2-1 states that we must provide our client and other intended users with enough information to understand the report. That requires
us to communicate with clients “on their level”.
An appraiser may provide more information and detail in the report than what is required by USPAP standard 2.
True/False
True
Sandy is appraising an income property for very knowledgeable client. Which statement is True regarding how much information Sandy must insert in her appraisal report?
Because the client is knowledgeable, Sandy may put less information in the report.
According to Standards Rule 2-1 how much information is an appraiser required to put in a n appraisal report?
Enough information so that the report may be understood ny client and intended users.
An appraisal report must be written so that anyone can understand it.
True/False
False
The same amount of information must appear in every written appraisal report.
False
Definition of assumption:
that which is taken to be true.
The appraisal Standards board deleted the definition of assumption because
its use is not intended to differ from the general english meaning of the word.
According to SR 2-1 even ordinary assumptions need to be disclosed. For expample:
I assume property’s title is good and marketable, and will render no opnions about the quality of the title.
I assume there are no hidden or unapparent conditions of the soil or subsoil that would render it more or less valuable.
An assumption, directly related to a specific assignment, as of the effective date of the assignment, results, which if found to be false, could alter the appraiser’s opnions or conclusion.
Extraordinary Assumption
“is directly related to a specific assignment”
An extraordinary asssumption is directly related to
a specific assignment.
We acknowledge that if we find that the extraordinary assumption is actually not rue, then
our value opnion could be impacted or changed as a result.
An extraordinary assumption might be used, for instance:
if we were to appraise a house with a small crack in the foundation. An appraiser is not expected to render an opinion about the structural integrity of the dwelling, and is generally not qualified to do so.
USPAP requires that we disclose the extraordinary assumption in the appraisal report. This disclosure gives notice to the client and intended users that
our knowledge of the property only goes so far.
When we disclose the use of the extraordinary assumption, we are also required to
state that its use may have affected the assignment results.
A hypothetical condition is something that we
know is not true, yet we appraise the property as though it were true.
What is the difference between an extraordinary assumption and a hypothetical condition
The level of certainty
A hypothetical condition permits the appraiser to “tell a lie” in the appraisal but the disclosure of the hypothetical condition in the report informs the client that it is not currently true.
True/False
True
A condition, directly related to a specific assignment, which is contrary to what is known ny the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.
Hypothetical condition
USPAP requires that a hypothetical condition be **clearly and accurately **disclosed, but does not specifically require that a hypothetical condition be labeled as a hypothetical condition.
True/False
True
Standards rule 2-1 states that disclosure of assumptions, and hypothetical conditions be
Clear and accurate
Standard 2-1 states Clear and conspicuous
true
An appraiser’s assumption that the subject property has clear and marketable title is an example of:
assumption
An appraiser’s assumption that the subject property has no hidden or unapparent conditions of the soil is an example of:
assumption
What distinguishes an extraordinary assumption from an “ordinary” assumption?
An extraordinary assumption is directly related to the specific assignment.
If unknown information is presumed to be fact in a specific appraisal assignment, this is an example of a
Extraordinary assumption
Kate notes an underground storage tank on a property she is appraising. The property owner gives her a copy of an environmental expert’s report stating the tank had leaked diesel fuel into the ground, and there was contamination which was never remediated. In appraising this property, can Kate employ an extraordinary assumption that the property is free of contamination?
No
If a property is appraised contrary to known fact, this would be
a hypothetical condition
Irving is appraising a proposed new home, based on plans. This is an example of:
A hypothetical condition
