Module 1 The appraiser and the public trust

Question 1

An appraisal is best defined as…

A) the act or process of developing an opinion of value

B) a professional estimate of a property

C) the report delivered to the client

D) the act or method of telling the client the market value of the real estate

Answer 1

A) the act or process of developing an opinion of value

Feedback: Correct. This was covered in the introductory material is an also found on page 2, item-C in the Course Handbook. An appraisal provides an opinion of value and is generally described as the act or process of developing that opinion.

Question 2

Sanchez is appraising a property for a client with the intended use of filing a tax appeal. In this type of assignment, which of the following choices best describes Sanchez’s role?

A) An appraiser working for the client’s lawyer
B) A representative of the client’s position
C) An advocate for the tax appeal board
D) An independent and impartial appraiser that is neutral to any position of the parties involved in the matter

Answer 2

D) An independent and impartial appraiser that is neutral to any position of the parties involved in the matter

Feedback: Correct. See page 10 of your Course Handbook and the online content under Ethical Practice. Independence and impartiality are attributes that define an appraiser. An appraiser must not advocate the cause or interest of any party or issue.

Question 3

What is one of the obligations an appraiser must ensure in order to ethically perform an appraisal assignment?
A) An appraiser must ensure independence
B) An appraiser must ensure subjectivity
C) An appraiser must accommodate any personal interest in the appraised property
D) An appraiser must ensure partiality

Answer 3

A) An appraiser must ensure independence
Feedback: Correct. Review page 10 of the Course Handbook and the online content under the heading of Ethical Practice. Independence is part of what defines an appraiser’s ethical role in an appraisal assignment.

Question 4

Appraisers must develop and communicate their work in a manner that is and to their clients. Choose the most correct response

A) Impartial and independent
B) Meaningful and not misleading
C) Frank and honest
D) Ethical and competent

Answer 4

B) Meaningful and not misleading

Feedback: Correct. See page 10, item B2 of your Course Handbook. This is under the heading of Ethical Practice in the online course. Some of the other responses to this question have elements of truth to them, but are not the best answers.

Question 5

A competency issue best applies to which of the following examples?

A) The appraiser’s identification of the client and other intended users

B) The appraiser’s knowledge of a specific analytical method

C) The appraiser’s identification of the effective date for the value conclusion

D) The appraiser’s method of communicating the assignment results

Answer 5

B) The appraiser’s knowledge of a specific analytical method

Feedback: Correct. Review page 12 of the Course Handbook and the online content under the heading of Competent Practice. This example was from a list of six competency factors that applies to the appraiser’s knowledge and experience.

Question 6

An appraiser’s familiarity with a specific type of property applies to what concept?

A) Impartiality
B) Intended use
C) Competency
D) Sufficient diligence

Answer 6

C) Competency
Feedback: Correct. Please see page 12 of the Course Handbook and also the online content under the heading of Competent Practice. Competency is the state of having the requisite or adequate ability, or work qualities to perform the specific assignment.

Question 7

What is the likely result of an appraiser that is sufficiently diligent in their appraisal practice?

A) Assignment results that are credible
B) Employing unrecognized methods and techniques
C) A substantial error of omission
D) Committing a series of errors that undermine the
credibility of the assignment results

Answer 7

A) Assignment results that are credible

Feedback: Correct. Review pages 13 and 14 of the Course Handbook and the online content under the heading of
Exercising Sufficient Diligence. This was discussed in the section on exercising sufficient diligence.

Question 8

Which of the following is the best example of an appraiser that has performed an appraisal service in a careless or negligent manner?

A)The appraiser turned in the appraisal report past the date that it was due.

B) The appraiser made a series of errors that individually might not significantly affect the results of the appraisal, but the errors affect the credibility of those results.

C) The appraisal report had several typos

D) The appraiser mislabeled one of the rooms in the building sketch, although it was correctly stated in the report content

Answer 8

B) The appraiser made a series of errors that individually might not significantly affect the results of the appraisal, but the errors affect the credibility of those results.

Feedback: Correct. Review pages 13 and 14 of the Course Handbook and the online content under the heading of
Exercising Sufficient Diligence. This was part of our discussion on exercising sufficient diligence in appraisal assignments.

Question 9

Which of the following is one of the assignment elements that an appraiser must identify prior to acceptance?

A) Assignment fee
B) Assignment exceptions
C) Assignment delivery date
D) Assignment conditions

Answer 9

D) Assignment conditions

Feedback: Correct. Review page 14 of the Course Handbook and the online content under the heading of Problem Identification and Scope of Work. Assignment conditions must be identified before the appraiser accepts the appraisal request.

Question 10

What is NOT true about the scope of work in the appraiser’s valuation process?
A) The scope of work is determined when the report is written.

B) The scope of work is decided after the appraiser has identified the problem to be solved

C) The actual scope of work performed must be disclosed in the appraisal report.

D) The appraiser must be prepared to demonstrate that the scope of work is sufficient to produce credible assignment results

Answer 10

A) The scope of work is determined when the report is written.

Feedback: Correct. Review page 14 of the Course Handbook and the online content under the heading of Problem Identification and Scope of Work. The scope of work may be modified to some degree during the assignment, but it is generally decided prior to the appraiser accepting the assignment.

Question 11

Recognize 3 components of sufficient diligence in appraisal practice

Answer 11

1. Be aware of, understand and correctly employ those recognized methods and techniques that are necessary to produce a credible appraisal
2. Not commit a substantial error of omission or commission that significantly affects an appraisal
3. Not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results

Question 12

Recognize components of competent appraisal practice

Answer 12

1. Disclose lack of knowledge before accepting
2. Get smart, become competent by the time assignment is done
3. Disclose steps taken to satisfy competency issue

• Ability to properly identify the problem to be addressed applies to:
• specifc property type
• an intended use
• a market
• a geographic area
• specific laws and regulations
• a geographic area
• an analytical method

Question 13

Define scope of work

Answer 13

• An overall strategy for solving your clients valuation problem
• The type and extent of research analysis undertaken in an assignment
• Scope of work continues to be refined as the work progresses
• The 6 elements of problem identification is integral to the scope of work decision

Question 14

Recognize components of ethical appraisal practice

Answer 14

• perform assignments with impartiality, objectivity independence and without accommodation of personal interest
• develop and communicate work in a manner that is meaningful and not misleading
• must not advocate the cause or interest of any party or issue

Question 15

Identify 6 elements in the problem identification process

Answer 15

1. Client and other intended users
2. Intended use
3. Type and identification of value (aka purpose)
4. Effective date
5. Subject of the assignment and its relevant characteristics
6. Assignment conditions
   * Established before assignment is accepted and is not modified or changed

Question 16

Recognize components of competent appraisal practice

Answer 16

1. Disclose lack of knowledge before accepting
2. Get smart, become competent by the time assignment is done
3. Disclose steps taken to satisfy competency issue
   - Ability to properly identify the problem to be addressed Applies to:
   - Specific property type
   - A market
   - A geographic area
   - An intended use
   - Specific laws and regulations
   - An analytical method

Question 17

Define scope of work

Answer 17

• An overall strategy for solving your clients valuation problem
• The type & extent of research analysis undertaken in an assignment
• Scope of work continues to be refined as the work progresses
• The 6 elements of problem identification is integral to the scope of work decision

Question 18

Recognize components of ethical appraisal practicece

Answer 18

• Perform assignments with impartiality, objectivity, independence, and without accommodation of personal interest
• Develop and communicate work in a manner that is meaningful and not misleading
• Must not advocate the cause or interest of any party or issue

Question 19

Identify 6 assignment elements in the problem identification process

Answer 19

1. Client and intended other users
2. Intended use
3. Type and identification of value (aka Purpose)
4. Effective date
5. Subject of the assignment and its relevant characteristics
6. Assignment conditions
   * *established before assignment is accepted and is not modified or changed**

Question 20

An appraiser must not advocate the cause of interest of any __________

Answer 20

Party or issue

Question 21

At what point must an appraiser be competent regarding an appraisal assignment?

Answer 21

Prior to accepting an assignment

Question 22

Appraisers must develop and communicate their work in a manner that is meaningful and _________ to their clients

Answer 22

Not misleading

Question 23

An Appraiser performing an assignment in an unfamiliar geographic location must spend sufficient time to understand the ____________ of the local market.

Answer 23

Nuances

Question 24

The appraiser must be prepared to demonstrate that the type and extent of research and analyses performed in the appraisal is sufficient to produce ________ assignment results

Answer 24

Credible

Question 25

True/False
An Appraiser must inform the client prior to accepting the assignment if he or she lacks the requisite knowledge and /or experience to complete the assignment competently

Answer 25

True

Question 26

True/False

A series of errors in an appraisal is acceptable as long as it does not significantly affect the value conclusion

Answer 26

False

Question 27

True/False
A fee arrangement contingent on an appraiser’s value conclusion will help the appraiser to maintain impartiality and independence

Answer 27

False

Question 28

True/False
In an assignment that involves a dispute between two parties it is the appraiser’s duty to represent his clients position

Answer 28

False

Question 29

Recognize components of sufficient diligence in appraisal practice

Answer 29

1. Be aware of, understand, and correct employ those recognized methods and techniques that are necessary to produce a credible appraisal
2. Not commit a substantial error of omission or commission that significantly affects an appraisal
3. Not render appraisal services in a careless or negligent manner, such as by making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results