Chapter 7 Narrative appraisal reports

Question 1

If an appraisal assignment requires a written report, but does not lend itself to the use of a form-type report, it is possible that the appraiser will need to write the entire report and explain everything in a

Answer 1

narrative reporting format

Question 2

An Appraisal Report presents a synopsis of the information. This requires that the appraiser’s workfile must contain additional details, ready to be provided if necessary. This type of report requires an appraiser to “summarize” significant parts of the appraisal assignment.

Answer 2

appraisal

Question 3

This type of report contains less information than an Appraisal Report. Much of the information can be simply stated, as opposed to explaining it in summary form. Many appraisers and industry participants think that the Restricted Appraisal Report is intended to take the place of the former one- or two-page “letter(s) opinion of value” often provided by appraisers before the existence of USPAP. This type of report requires an appraiser to simply “state” the required information. A major difference between the use of a Restricted Appraisal Report and the Appraisal Report is that the client is the only intended user. The Restricted Appraisal Report is solely for the use of the one client/intended user, and there may be no other identified intended users. (USPAP states the client is always an intended user.)

Answer 3

Restricted Appraisal Report

Question 4

What is the primary difference between the Appraisal and Restricted types of appraisal reports?
Restricted reports contain much less detail and narrative description
Restricted appraisals can only be provided with the intended user’s permission
Summary and Restricted Use appraisals do not need to feature or contain any maps or photographs
The narration provided in a Appraisal Report is the same as a Restricted report, but its workfile is much larger

Answer 4

restricted reports contain much less detail and narrative description

Question 5

Which of the following is ALWAYS an intended user of an appraisal report?
The client’s attorney
Mortgage lenders
Appraisal management company (AMC)
The client

Answer 5

the client

Question 6

A narrative appraisal report can be used to comply with the minimum content requirements of a Restricted Appraisal Report.
True
False

Answer 6

true

Contrary to popular belief, a narrative appraisal report does not have to be lengthy. This type of report can be used to comply with any of the two USPAP-compliant reporting options.

Question 7

In which section of a narrative appraisal report do appraisers usually include general assumptions and limiting conditions?
Addendum
Contents page
Cover (transmittal) letter
Value conclusion and final opinion of value

Answer 7

addendum

The assumptions and limiting conditions are usually contained with the addendum of the appraisal report

Question 8

In a narrative appraisal report, generally, where should you include maps, photographs, graphs, and similar exhibits?
Within the body only
Within the addendum only
In the body, in the addendum, or in both places
In neither the body nor the addendum

Answer 8

in the body, in the addendum, or in both places

Question 9

In a narrative appraisal report, it is considered a best practice to include a letter of transmittal.
True
False

Answer 9

true

Question 10

Which statement is true regarding general assumptions and limiting conditions?
Many appraisers attach them to the appraisal contract and require client acknowledgment before beginning the assignment.
They are usually included in the addendum to the report.
They limit or restrict the appraiser’s responsibilities.
All of the above

Answer 10

all of the above

Question 11

In an appraisal report, it is not necessary to explain the meanings of acronyms such as USPAP because an intended user of an appraisal should already have a basic knowledge and understanding of appraisal terminology and USPAP.
True
False

Answer 11

false

Question 12

After you finish writing a narrative report, it is a good idea to set it aside for a day or two and then read it to ensure that it can be properly understood by intended users.
True
False

Answer 12

false

Question 13

If, in developing your appraisal, you excluded something you believe an intended user may be concerned about, what should you do?
Ignore the issue, as you cannot know what an intended user may or may not be concerned about
Explain in the report why you did not include or address an item of such potential concern
You should never exclude an item such as this from an appraisal report
Use the Fannie Mae 1004 form as a guide for minimum report content

Answer 13

Explain in the report why you did not include or address an item of such potential concern

Question 14

Which of these statements is true regarding USPAP reporting requirements?
USPAP does not set forth or suggest a specific way to address the items it requires to be addressed in an appraisal report.
USPAP requires that certain items be addressed in all Appraisal Reports and Restricted Appraisal Reports.
The USPAP-required items do not need to be addressed in a specific location or section of an appraisal.
All of the above

Answer 14

All of the above

Question 15

Why is the title page important in a narrative appraisal report?
Because it is your opportunity to make a positive first impression
Because it is the only page of the report that most intended users will read
Because all information necessary for USPAP compliance should be on the title page
All of the above

Answer 15

Because it is your opportunity to make a positive first impression

Question 16

What are the four sections into which some appraisal organizations recommend separating a narrative appraisal report?
Introduction, appraisal problem and scope of work, presentation of the data, analysis and conclusion
Cover page, letter of transmittal, USPAP requirements, addendum
USPAP requirements, location and surroundings, property description, addendum
Location and surroundings, property description, explanation of the three approaches to value, addendum

Answer 16

Introduction, appraisal problem and scope of work, presentation of the data, analysis and conclusion

Question 17

Which would be considered the BEST presentation of information in a narrative appraisal report?
Long, complex sentences
Bullet points
Run-on sentences
None of the above

Answer 17

bullet points

Question 18

What does a well-written appraisal report do for the client?
Reflect that the appraiser spent sufficient time and provided a lengthy enough report to justify his or her compensation
Enable the client to use the appraisal report for a variety of other uses in addition to the use intended for the appraisal report
Instill confidence that the appraiser has properly and professionally performed the steps necessary to produce a credible opinion of value
Enable the client to have a meaningful discussion with the appraiser after the client has read the report

Answer 18

instill confidence that the appraiser has properly and professionally performed the steps necessary to produce a credible opinion of value

Question 19

Which of the following is ALWAYS an intended user of an appraisal report?
The client’s attorney
Mortgage lenders
Appraisal management company (AMC)
The client

Answer 19

the client

Question 20

What is the primary difference between the Appraisal Report and the Restricted types of appraisal reports?
Restricted Appraisal Reports contain much less detail and narrative description
Restricted Appraisal Reports can only be provided with the intended user’s permission
Restricted Appraisal Reports do not need to feature or contain any maps or photographs
The narration provided in Appraisal Report is the same as a Restricted report, but its workfile is much larger

Answer 20

restricted appraisal reports contain much less detail and narrative description

Question 21

Residential appraisers who primarily use form reports are usually not accustomed to discussing assumptions and limiting conditions with their clients.
True
False

Answer 21

true

Question 22

What is the best way to explain the appraiser’s highest and best use analysis in an Appraisal Report?
By separately explaining and describing each of the four test criteria
By explaining the USPAP definition of highest and best use
By using a hypothetical condition and assuming the highest and best use is the current use
None of the above

Answer 22

by separately explaining and describing each of the four test criteria

Question 23

If, in developing your appraisal, you excluded something you believe an intended user may be concerned about, what should you do?
Ignore the issue, as you cannot know what an intended user may or may not be concerned about
Explain in the report why you did not include or address an item of such potential concern
You should never exclude an item such as this from an appraisal report
Use the Fannie Mae 1004 form as a guide for minimum report content

Answer 23

explain in the report why you did not include or address an item of such potential concern

Question 24

Which statement is true regarding general assumptions and limiting conditions?
Many appraisers attach them to the appraisal contract and require client acknowledgment before beginning the assignment.
They are usually included in the addendum to the report.
They limit or restrict the appraiser’s responsibilities.
All of the above

Answer 24

all of the above