USPAP Ch 11 Quiz Flashcards
STANDARD 5 is most similar in structure to:
STANDARD 1
STANDARD 5, Mass Appraisal, Development, applies to:
Both real and personal property
The chief appraiser for a city assessor’s office prepares the annual values for all the commercial and industrial properties. A state statute requires that the properties be appraised as if in fee simple. An owner of several multi-tenant properties in the city is appalled when he receives his assessment notices. He has owned the properties for over ten years, and some of his leases date back to the time he purchased the buildings. The owner calls the appraiser and learns the properties are being valued at market rent levels despite the fact that if he wanted to sell the buildings, the purchaser would have to honor the existing lease contracts. The owner’s complaint, filed with the city manager, states the appraiser is not using the appropriate valuation methodologies and techniques for valuing his leased fee interest. Did the appraiser violate USPAP by valuing the properties using market rent levels rather than contract rents?
The appraiser correctly appraised the properties as if in fee simple and unencumbered by existing leases as required by state statute.In ad valorem taxation the appraiser may be required by rules or law to appraise the property as if in fee simple, unencumbered by existing leases. In such cases, market rent would be used in the appraisal, ignoring the effect of the individual, actual contract rents.
An appraiser is engaged by her local county assessment board to complete an appraisal on an apartment building for ad valorem taxation purposes. Which USPAP STANDARD(S) apply to this assignment?
STANDARDS 1 and 2
In a written mass appraisal report prepared under STANDARD 6, what is the purpose of a signed certification?
It serves as an appraiser’s acknowledgement of his or her ethical obligations
Notifications sent to property owners of the results of a mass appraisal, which may be required by public policy, are considered:
Notifications, and not reports
In a personal property appraisal assignment that includes multiple objects as part of the same assignment:
The objects that are more significant to the assignment results should be the focus of the analysis
When appraising personal property, the appraiser must analyze prior sales of the subject over what time period?
A reasonable and applicable time
An appraiser must recognize that there are distinct levels of trade in personal property, and each may have different comparable data.
TRUE
The owner/operator of an antique shop advertises that she offers appraisal services. An attorney has asked her to perform an appraisal of personal property for estate taxes, explaining that the estate was left to an only son. She accepts the assignment. After inspecting the furniture, glassware, china, silver, and other household contents, the appraiser completed the appraisal. In the report, she provided a short cover letter that stated she had performed the appraisal, identified the total marketable cash value, made an offer to buy the estate at the value given, and included her signature. Attached were 13 pages of inventory with short descriptions and individual values for each property. Did the appraiser comply with USPAP?
No. The appraiser failed to comply with STANDARD 8. The report did not contain much of the information required in Standards Rule 8-2(a) or (b), including lack of disclosure of all limiting conditions and a disclosure of the scope of work undertaken to complete the assignment. The report did not include a signed certification (Standards Rule 8-3). The appraiser did not comply with theConductsection of the ETHICS RULE. An offer to buy evidences a “prospective interest” in the subject of the assignment and implies at least a preference or inclination that precludes an appraiser’s impartiality.
Which of the following reports require a signed certification?
All oral and written reports covered in USPAP
An appraiser is developing an appraisal and will be reporting it in a Restricted Appraisal Report. Because this less detailed reporting option is being used, is the appraiser permitted to use an abbreviated appraisal development process?
No
Under STANDARD 8, a personal property appraiser has ____ written report options.
2
An appraiser has been asked for a value based only on “rules of thumb” used in a specific industry. The client intends to rely on the value as a “guideline valuation” for a buy-sell agreement. What should the appraiser do?
The key discussion point is the role of an appraiser compared to that of a person who does not represent him or herself as an appraiser. In the business appraisal discipline, uses of “rules of thumb” are viewed as a very limited scope of work. For the intended use stated, there is a good chance that use of a rule of thumb without other research and analyses would not be an acceptable scope of work, i.e., would not produce credible assignment results. Therefore, the appraiser in this example would not be able to perform the assignment as requested. However, an individual who does not represent him or herself to be an appraiser is free to provide his/her client with a value conclusion based on a rule of thumb. The client would have no expectation that the individual would be providing professional appraisal advice.
A company has recently redeemed a retired director’s stock. However, no mention of any prior transaction in company stock is made in a later appraisal. You are reviewing the appraisal report and wonder why no mention of the prior transaction was made, especially since the prior transaction was conducted at a price of more than double the appraisal conclusion. Upon further analysis, you find that the prior transaction seems to be overpriced, and the appraisal results seem appropriate. Did the appraiser comply with USPAP?
The issue is addressed in Standards Rule 9-4(b)(iv), which calls for analyzing past sales of capital stock or other ownership interests in the business being appraised when they are relevant. The transaction appears relevant and thus should have been noted in the report; and, if it was not believed to be indicative of value, this should have been discussed and supported.
