Reporting Basics and Options Flashcards
STANDARD 2 of USPAP establishes the ____________requirements for real property appraisal reports. As such, these requirements are a good starting point for a discussion of appraisal reporting.
minimum
Remember that these USPAP requirements are for report _______
content
Each written or oral real property appraisal report must:
-clearly and accurately set forth the appraisal in a manner that will not be misleading;
-contain sufficient information to enable the intended users of the appraisal to understand the report properly; and
clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions used in the assignment.
It is worth noting that this Standards Rule applies to both
written and oral real property appraisal reports
We can avoid being misleading in our appraisal reports by making sure that we
“clearly and accurately set forth the appraisal”
Sandy is appraising an income property for a very knowledgeable client. Which statement is TRUE regarding how much information Sandy must insert in her appraisal report?
The client’s level of knowledge does not matter; a report would be worthless.
Sandy should write the report to an eighth-grade reading level.
Sandy must ensure that her report cannot be understood by anyone.
Because the client is knowledgeable, Sandy may put less information in the report.
Because the client is knowledgeable, Sandy may put less information in the report.
The same amount of information must appear in every written appraisal report.
True
False
False
When reporting, USPAP states that an appraiser must clearly and accurately set forth the appraisal in a manner that will not be misleading.
True
False
true
An appraisal report must be written so that anyone can understand it.
True
False
False
that which is taken to be true.
assumption
an assignment-specific assumption, as of the effective date, which, if found to be false, could alter the appraiser’s opinions or conclusions.
extraordinary assumption
Whereas we believe an extraordinary assumption to be true, a hypothetical condition is something that we know is
not true, yet we appraise the property as though it were true
a condition, directly related to a specific assignment, which is contrary to what is known by 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
Standards Rule 2-1 of USPAP states that disclosure of assumptions, extraordinary assumptions, and hypothetical conditions must be
clear and accurate
As a reminder, it is not sufficient for the report to merely disclose the use of an extraordinary assumption or hypothetical condition. USPAP requires the report to also state that the use of the extraordinary assumption or hypothetical condition might have affected the
assignment results
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 that the tank had leaked diesel fuel into the ground, and there was significant contamination which was never remediated. In appraising this property, can Kate employ an extraordinary assumption that the property is free of contamination? Yes No Only if the client provides permission USPAP does not specify an answer
no
If a property is appraised contrary to known fact, this would be a(n) \_\_\_\_\_\_\_\_\_. Extraordinary assumption Hypothetical condition Disclaimer Competency statement
hypothetical condition
Under USPAP, disclosure of extraordinary assumptions and hypothetical conditions must be clear and conspicuous.
True
False
true
. The specific details of required minimum report content for written reports are found in Standards Rule 2-2:
Each written real property appraisal report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Appraisal Report.
An appraiser may use any other label in addition to, but not in place of, the labels set forth in this Standards Rule for the type of report provided. The use of additional labels such as analysis, consultation, evaluation, study, or valuation does not exempt an appraiser from adherence to USPAP.
The report content and level of information requirements in this Standards Rule are minimums for each type of report. An appraiser must supplement a report form, when necessary, to ensure that any intended user of the appraisal is not misled and that the report complies with the applicable content requirements
Two options for written real property appraisal reports:
Appraisal Report
Restricted Appraisal Report
In a written real property appraisal report, USPAP requires that a statement of the reporting option must be \_\_\_\_\_\_\_\_\_\_\_. Omitted Included in a list of assumptions Stated on every page Prominent
prominent
An appraiser prepares an Appraisal Report which does not contain all 14 of the minimum content requirements required by Standards Rule 2-2. Which statement is TRUE regarding the report?
It is still an Appraisal Report.
It is USPAP-compliant because most of the 14 content items are optional.
The appraiser should label it “Consulting Report.”
It does not comply with USPAP
it does not comply with USPAP
An appraiser may use another label in place of the report option label required by USPAP Standards Rule 2-2.
True
False
FALSE
This addresses the content of the appraisal report options of Standards Rule 2-2, so we will consider this “other communication” from the Appraisal Standards Board (ASB)
Advisory Opinion 38
Not considered part of USPAP
Advisory Opinions
Essential difference between reporting an appraisal report and a restricted appraisal report
SUMMARIZE and STATE
When providing an Appraisal Report, sometimes you must summarize information, but not always. There are some items in an Appraisal Report that can merely be stated.
“The following presentations of the zoning section of a commercial appraisal report are used to exemplify the content differences in the two appraisal report options. These examples show a relative illustration of depth and detail of presentation and are not intended to characterize the format for an entire appraisal report. The examples are not intended to imply that information on zoning is necessary in all appraisal reports.”
Examples of the Application of the Terms “Summarize,” and “State” in the Context of a Real Property Appraisal Report
“The General Business B-4 zoning classification applies. Its purpose is to encourage local commercial development of banking facilities, retail stores, and service establishments along arterial streets on minimum lots of 10,000 sq. ft. with a width of 100 feet. Building coverage is limited to 50% of the lot, and building height is limited to two stories or 20 feet. John N. Forcer of the Anytown planning and zoning office indicates that the existing use and subject improvements conform”
Zoning. Example of “Summarize” from AO-38
“General Business, B-4; existing use and subject improvements conform.
The purpose of the above examples is to show one view of the differences among the application of the terms “describe,” “summarize,” and “state.” The examples should not be extended beyond this Advisory Opinion to every section of an appraisal report.”
Example of “state” from advisory opinion 38
What are the operative words that establish the differences between the two USPAP written report options?
Complete, limited
Summarize, state
Form, narrative
Extraordinary assumption, hypothetical condition
summarize, state
A party who receives a copy of an appraisal report in order to satisfy disclosure requirements becomes an intended user.
True
False
false
What is one of the pitfalls of using pre-printed standardized forms to report an Appraisal Report?
An Appraisal Report cannot be used if there are intended users other than the client.
It is difficult to provide a summary of information by checking boxes and filling blanks.
USPAP prohibits the use of pre-printed standardized forms.
Most clients are unfamiliar with these forms, and do not know how to read them.
it is difficult to provide a summary of information by checking boxes and filling blanks
According to Standards Rule 2-1, how much information is an appraiser required to put in an appraisal report?
The same level of information must be in every written report
Enough information so that the report may be understood by client and intended users
Sufficient information so that the report can be understood by anyone who reads it
Information consistent with the content of the URAR form
enough information so that the report may be understood by the client and intended users
USPAP STANDARD 2 establishes \_\_\_\_\_\_\_\_ requirements for real property appraisal reports. Maximum Minimum No Optional
minimum
What is the essential difference between the two reporting options specified in USPAP Standards Rule 2-2?
The level of detail in the report
The amount of analysis required
The thickness of the appraisal workfile
An Appraisal Report has more than 12 required report elements
the level of detail in the report
An appraiser prepares a Appraisal Report which does not contain all 12 of the minimum content requirements required by Standards Rule 2-2. Which statement is TRUE regarding the report?
It is still an Appraisal Report.
It is USPAP-compliant because most of the 12 content items are optional.
The appraiser should label it “Consulting Report.”
It does not comply with USPAP.
it does not comply with uspap
An appraiser is preparing an Appraisal Report. What is the operative word regarding the level of detail she must provide in the report? Summarize Explain Describe State
summarize
What is the role of Advisory Opinion 11 with regard to appraisal reporting?
Sets forth binding requirements that appraisers must follow
Establishes additional requirements that have the force of law
Provides guidance and advice
Sets forth requirements that only apply to narrative reports
provides guidance and advice
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 that the tank had leaked diesel fuel into the ground, and there was significant contamination which was never remediated. In appraising this property, can Kate employ an extraordinary assumption that the property is free of contamination? Yes No Only if the client provides permission USPAP does not specify an answer
no
Irving is appraising a proposed new home, based on plans and specifications. He is appraising the property as though the new home has been completed as of a current effective date; however, it is actually a vacant lot. This is an example of: An extraordinary assumption A hypothetical condition A USPAP violation The JURISDICTIONAL EXCEPTION RULE
a hypothetical condition
