USPAP Ch 4 Quiz Flashcards
A potential client has asked me to complete a form indicating what my appraisal fee would be for different assignments. The form asks me to indicate my appraisal fees according to appraised value by listing the fee for assignments with appraised values between $100,000 and $299,000, $300,000 and $499,000, and so on. Is it a violation of USPAP to quote fees in this manner?
Yes, this is a violation of USPAP.
An appraiser completes an appraisal and transmits the report to the client. The report copy retained in the appraiser’s workfile does not have a signature affixed to it. Is this permissible under USPAP?
No, a true copy must include a signature
An appraiser concludes that a subject property has functional inadequacies. This conclusion is:
An assignment result and must be treated as confidential
An appraiser has been asked to complete an appraisal assignment. The fee is to be paid only if the loan closes. According to USPAP, may the appraiser accept the assignment under these conditions?
No, the fee arrangement is an unethical contingency arrangement and violates the ETHICS RULE.
An appraiser is asked to perform an assignment involving a property type with which he has had no previous experience or knowledge. The appraiser notifies the client of his inexperience and lack of knowledge and the means for overcoming both issues. The report does not, however, disclose any of this information, as the client specifically asked the appraiser to keep the information confidential. Has the appraiser complied with USPAP?
No. The COMPETENCY RULE requires that the lack of experience be disclosed in the report, and failure to do so is a violation of this Rule.
An appraiser is disclosing to a client the fact that she had previously appraised the subject property within the prior three years. When making this disclosure, the appraiser must be careful to:
Not disclose confidential information from the previous assignment
An appraiser must disclose any service he or she provided regarding the subject property for a period of _________ prior to agreeing to perform the assignment.
Three years
An appraiser prepared an appraisal report in April 2019. He testified in court regarding the value of the property in January 2020. The decision was rendered in February 2020 and was appealed in April 2020. The appellate court heard the case in January 2021 and remanded the case for reconsideration by the lower court. Final disposition of the case occurred in September 2021. At a minimum, how long must the appraiser retain his workfile?
4/1/2024. An appraiser must retain the workfile for five years after preparation or two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever period is later. April 2024 (five years after preparation) is longer than September 2023 (two years after final disposition).
How must recognition of my significant appraisal assistance be included when there is no written report, but significant assistance was provided and documentation of my work is in the workfile?
Based on the requirements in USPAP, the workfile of an oral report must include a signed certification stating the name of the person or persons providing significant appraisal assistance. The oral report must also include a summary of the extent of that assistance because Standards Rule 2-4 requires that oral reports address the substantive matters set forth in Standards Rule 2-2(a), which are the requirements for an Appraisal Report. SeeFAQ 281, “Reporting Significant Appraisal Assistance in an Oral Report.”
I am a residential appraiser performing work for several Appraisal Management Companies. Often, I am asked to perform an appraisal assignment outside the geographic areas I am most familiar with. The assignments come with a requirement that a completed report be submitted within 48 hours or less. This time frame does not permit me to adequately research the subject property market. Is it permissible for me to agree to perform an assignment under these conditions?
The client must be notified, appropriate steps must be taken to become competent, and the lack of competency plus the steps taken to become competent must be disclosed in the assignment report.
I just completed my first assignment for a new client, and the client is very angry and is refusing to pay me. The client is a lender and the subject property is a mid-size office property that I am well qualified to appraise. However, the client says that I did not use the correct definition of market value (the one required by FIRREA) and that I did not follow other requirements for appraisals used by federally regulated financial institutions.The client did not tell me about these things when I started the assignment. I think it is their fault and not mine. I said if they want to pay me more, I will re-do the report with the new requirements. Is the client or the appraiser correct? Has there been a violation of USPAP by the appraiser?
The client is correct. The appraiser has the responsibility to know all the laws and regulations applicable to an assignment, independent of information from the client. TheCommentto theBeing Competentsection of the COMPETENCY RULErequires recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.
I know appraisers who consistently conclude that the market value of any property they appraise is equal to the contract sales price. In doing so, they facilitate sales and financing of purchases, which is apparently what keeps their clients happy. Is this a violation of USPAP?
A contract price can be a good indicator of a property’s market value, and it may be logical and reasonable for the appraiser to conclude that they are the same. However, this is not always the case. A contract sales price, while a significant piece of market data, must not become a target in an appraisal assignment. Competent analysis of relevant and credible market data must be the appraiser’s basis for a market value conclusion.
I occasionally receive requests to appraise a property that I have appraised in the past. Since the ETHICS RULE requires me to disclose any assignments I performed within the three years immediately preceding the agreement to perform the assignment, isn’t such a disclosure a violation of an appraiser’s responsibility under theConfidentialitysection of the ETHICS RULE?
Generally, no. TheConfidentialitysection of the ETHICS RULE prohibits, with some exceptions, the disclosure of “confidential information or assignment results prepared for a client.” The mere fact that an appraiser appraised a property is not confidential information as defined in USPAP. However, the appraiser must be careful not to disclose confidential information from a previous assignment in the new assignment. SeeFAQ 15, “Disclosing Prior Appraisal of a Property.”
I read an appraisal report that included the paragraph below regarding the subject property’s improvements. The paragraph appears to include both a description of the physical characteristics, as well as the appraiser’s opinions (i.e., assignment results). I would like clarification on which items are physical characteristics and which are assignment results.
Items that fall under the category of physical characteristics include: the address (245 Broad Street); the age of the improvements (constructed in 1985); the appliances, bathroom fixtures, and heat/AC; the number of bedrooms and baths on the second floor; and the color of the walls (pink, yellow, and purple). Assignment results (the appraiser’s analyses, opinions, and conclusions) include: identifying “functional problems”; and the “interior décor is dated.” See FAQ 76. “Physical Characteristics or Assignment Results?” The statement, “The improvements were constructed in 1985 and were renovated in 2010 with all new appliances, bathroom fixtures, and heat/AC” includes only physical characteristics.
I was recently told that USPAP allows appraisers to wait and create a workfile after the report has been delivered to the client for an appraisal or appraisal review. Is this true?
No.A workfile must be in existence prior to the issuance of a report or other communication of assignment results.
