Chapter 7 - Standard 1

Question 1

Which statement is FALSE regarding STANDARD 1?

• It can be used as a checklist for proper development.
• It contains six Standards Rules.
• It mirrors the appraisal process.
• It covers real and personal property appraisal development.

Answer 1

It covers real and personal property appraisal development.

Question 2

The requirements of STANDARD 1 can be used as a checklist by an appraiser who is developing a real property appraisal.

Answer 2

True

Question 3

If a mortgage borrower receives a copy of an appraisal report from a mortgage lender as a result of disclosure requirements:

Answer 3

This does not make the borrower an intended user

Question 4

An appraiser’s client wishes to remain anonymous, and asks the appraiser not to include client’s identity in an appraisal report. What should the appraiser do?

Answer 4

Omit the client’s identity from the report but document the client’s identity in the workfile

Question 5

When does a series of minor errors potentially result in a USPAP violation?

Answer 5

When the series of errors affects the credibility of the results

Question 6

Which statement is TRUE regarding exposure time?

• It is always assumed to precede the effective date of the appraisal.
• It is always assumed to begin on the effective date of the appraisal and extend out into the future.
• It is necessary in all appraisal assignments.

Answer 6

It is always assumed to precede the effective date of the appraisal.

Question 7

Exposure time is:

Answer 7

An opinion developed by an appraiser

Question 8

An example of a relevant property characteristic that could affect a real property appraisal assignment would be:

Answer 8

The fact that the subject property is affected by an easement

Question 9

When appraising a property with proposed improvements, what type of value opinion is permitted by USPAP?

Answer 9

Both current and prospective values

Question 10

What is the primary purpose of an appraiser making an inspection of the subject property?

Answer 10

To collect information about characteristics that are relevant to value

Question 11

An extraordinary assumption may be used in an assignment only if:

Answer 11

Required to develop credible results

Question 12

When an appraiser provides a current value opinion on a proposed new building, he or she is utilizing a(an) _____________ that the proposed improvements are completed as of the effective date of the appraisal.

Answer 12

Hypothetical condition

Question 13

An unacceptable assignment condition would be a condition that:

• Limits report content, resulting in a misleading report
• Limits the scope of work to the extent that the value opinion is not credible
• All of the answers listed
• Precludes an appraiser’s impartiality

Answer 13

All of the answers listed

Question 14

A local lender has asked me to appraise a 5-acre portion of a 62-acre parcel. Am I permitted to comply with this request?

Answer 14

Yes, if applicable to assignment conditions. (ex. Fannie Mae & Freddie Mac do not permit this)

Question 15

I was recently asked to perform a real estate appraisal assignment, but the individual who contacted my firm was not the client and indicated that the client could not be identified. Can I agree to perform this assignment and comply with USPAP?

Answer 15

No, appraiser must identify the client and other intended users.

Question 16

Which statement is TRUE regarding USPAP and the three approaches to value?

• An appraiser must develop all three approaches to value in every appraisal assignment.
• An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.
• USPAP requires that at least two of the three approaches be developed in every appraisal assignment.
• USPAP requires specific methodology for developing the cost and income approaches, but not the sales comparison approach.

Answer 16

An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.

Question 17

When developing a sales comparison approach under USPAP:

Answer 17

The appraiser must analyze such data as are available to indicate a value conclusion

Question 18

When analyzing listings of the subject property in a real property appraisal assignment, USPAP requires an appraiser to analyze, at a minimum, ____________.

Answer 18

Current listings

Question 19

When analyzing the subject property’s sales history in a real property appraisal assignment, an appraiser is required by USPAP to analyze ______________.

Answer 19

All sales of the subject property that occurred within three years prior to the effective date of the appraisal

Question 20

I am currently appraising an office building that was transferred 18 months ago by a deed in lieu of foreclosure. Am I required to analyze this transaction?

Answer 20

Yes. All sales of the appraised property within the three-year time period must be analyzed; this includes transfers in lieu of foreclosure and foreclosure sales.

Question 21

Does Standards Rule 1-5 require an appraiser to analyze the sales history for the comparable sales?

Answer 21

No. This Standards Rule addresses only the subject property. Analysis of the sales history of the comparable properties may be an assignment condition required by certain clients or client groups, but it is not a USPAP requirement.

Question 22

I know that USPAP requires an appraiser to develop a reconciliation of the approaches to value that are used in an assignment. Does USPAP require the appraiser to reconcile the data used in each approach to value?

Answer 22

Yes. This is required by USPAP Standards Rule 1-6.

Question 23

The process of reconciliation entails ___________.

Answer 23

Careful consideration of the quality and quantity of data

Question 24

In the development of an appraisal, the appraiser is required to:

Answer 24

Not commit a substantial error that significantly affects the appraisal

Question 25

When is it necessary to analyze prior listings of the subject property in a real property appraisal assignment?

Answer 25

When such analysis is relevant to the current assignment