USPAP Ch 3 Quiz Flashcards
A preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity is:
Bias
An appraiser is permitted to be biased when performing an appraisal, as long as the bias is properly disclosed.
FALSE
A client has repaired a property that was damaged due to flooding. Several neighboring properties that were similarly flooded and later repaired soon developed mold problems. The client’s property shows no evidence of mold as of the effective date. What type of assignment condition should the appraiser use if the client wants a current value opinion of the property?
The appraiser should use an extraordinary assumption, because as of the date of value, the fact of the potential condition (i.e., mold) is unknown, and it is reasonable to believe the current condition is true.
A client wants to know the current value, as though repaired, of a property that has been damaged due to flooding from a severe storm. What type of assignment condition should the appraiser use?
The appraiser should use a hypothetical condition because the propertyas if repaireddoes not currently exist as of the effective date.
A mortgage client suggested to an appraiser that if he would increase the value conclusion from $520,000 to $525,000 on an appraisal there would be more assignments coming his way. Should the appraiser change his opinion of value since it is less than a 1% difference?
No. An appraiser must perform assignments without accommodation of personal interests (promise of additional work). Additionally, an appraiser must not advocate the cause or interest of any party (either the mortgage broker or the homeowner).
If an appraiser assumes a condition to be true that does not exist for the purposes of analysis, this is an example of:
A hypothetical condition
If an appraiser assumes a condition to be true, and evidence supports that belief, although that fact is not certain, this is an example of:
An extraordinary assumption
An appraiser performed the cost approach in an appraisal of a new warehouse. The buyer paid $1.9 million for the building and site. The property’s market value was $2 million. Identify each of the three components: the reproduction cost developed by the appraiser, the $1.9 million figure, and the $2 million figure as (a) fact, (b) an estimate of fact, or (c) an opinion in relation to the appraisal of this property.
The reproduction cost developed by the appraiser is anestimate of fact(b). The $1.9 million sale is the price as a stated fact (a). The $2 million value of the property is the appraiser’s opinion (c).
By using a published cost manual, an appraiser determines that the construction cost of a 2,500 square foot dwelling is $400,000. This figure represents the dwelling’s:
Cost. Cost is the amount required to create, produce, or obtain a property. Cost is a fact, or an estimate of fact.
“The monetary relationship between properties and those who buy, sell or use those properties” is the definition of:
Value
An appraiser receives a copy of a signed sales agreement for an office building, which specifies the agreed-upon amount of $950,000. What does this figure represent?
Price
According to USPAP, the party or parties who engage an appraiser in a specific assignment defines the:
Client
It is permissible for an appraiser to be engaged in an assignment by an agent, who is acting on behalf of the client.
TRUE. Client is defined as: the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directly or through an agent. The client may be identified as an individual, group, or entity, and may engage and communicate with the appraiser directly or through an agent.
An appraiser performs an appraisal assignment and develops an opinion of value. This value opinion is
an assignment result
I perform assignments from an Appraisal Management Company (AMC) that has informed me that they are an authorized agent for the lenders they represent. As the AMC is not my client, they have requested that I only identify the lender they are representing as the client. USPAP says the appraiser’s client is the party who engages the appraiser. Is it ethical for me to omit the AMC’s name as the client on my reports?
Yes. If the AMC is acting as an agent for a lender, identifying only the lender as your client is acceptable. The USPAP definition of client is:the party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether directlyor through an agent.However, the appraiser must be aware of situations where disclosure of the AMC might be required by law, regulation, or the secondary market. SeeFAQ 129, “Appraisal Management Company as Authorized Agent for a Client.”
