USPAP Quiz weaknesses

Question 1

If an appraiser assumes a condition to be true that does not exist for the purposes of analysis, this is an example of:

A. An extraordinary assumption
B. A hypothetical condition
C. A limiting condition
D. An assumption

Answer 1

B. A hypothetical condition

Rational:
A hypothetical condition is used to appraise a property under a condition contrary to known fact.

Question 2

“The monetary relationship between properties and those who buy, sell or use those properties” is the definition of:

A. Cost
B. Price
C. Value
D. None of these

Answer 2

C. Value

Rational:
Value is defined in USPAP as the monetary relationship between properties and those who buy, sell or use those properties, expressed as an opinion of the worth of a property at a given time.

Question 3

It is permissible for an appraiser to be engaged in an assignment by an agent, who is acting on behalf of the client.

True
False

Answer 3

True

Rational:
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.

Question 4

An appraiser performs an appraisal assignment and develops an opinion of value. This value opinion is:

A. a fact
B. an estimate of fact
C. an assignment result

Answer 4

C. an assignment result

Rational:
If an appraiser develops an appraisal on a property and concludes a value opinion, that value opinion is an assignment result.

Question 5

In USPAP, each Standard is composed of:

A. Practical advice
B. Voluntary guidance
C. Standards Rules
D. Statements on Appraisal Standards

Answer 5

C. Standards Rules

Rational:
Each Standard is composed of Standards Rules that identify the requirements and guidance applicable to that Standard.

Question 6

The requirement for USPAP compliance in an appraisal assignment could be the result of:

A. Law or regulation
B. Agreement with the client
C. Voluntary choice by the appraiser
D. Any of these answers

Answer 6

D. Any of these answers

Rational:
The requirement to comply with USPAP could be triggered by law, regulation, agreement with the client, or the appraiser’s choice.

Question 7

Why are USPAP Advisory Opinions issued?

A. To offer advice
B. To establish new appraisal standards
C. To interpret existing standards
D. To revise existing standards

Answer 7

A. To offer advice

Rational:
Advisory Opinions and FAQs offer advice and guidance, but do not establish new standards or interpret existing standards

Question 8

The ethical obligations of USPAP apply to:

A. Individual appraisers
B. Appraisal companies
C. Appraisal clients
D. All of the answers listed

Answer 8

A. Individual appraisers

Rational:
USPAP does not apply to appraisal companies; however, the ETHICS RULE exhorts appraisers who are employed by companies who do not conduct themselves in accordance with USPAP to take whatever steps are appropriate to ensure USPAP compliance. USPAP does not apply to appraisal clients.

Question 9

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.

A. Ten years
B. One year
C. Three years
D. USPAP does not specify a prior time period

Answer 9

C. Three years

Rational:
An appraiser must disclose all prior services provided by the appraiser regarding the subject property within the three-year period immediately preceding the agreement to perform the assignment.

Question 10

In a real property appraisal assignment prepared for a mortgage lender, an appraiser is permitted by USPAP to base his compensation for an appraisal assignment on:

A. The amount of the value opinion
B. Reconciling the value conclusion to the high end of the indicated range
C. Whether or not the loan transaction closes
D. Whether or not the report is transmitted to the client by the due date

Answer 10

D. Whether or not the report is transmitted to the client by the due date

Rational:
An appraiser may base his or her fee on whether or not the report is delivered in a timely manner. However, the other answer choices were all listed in the ETHICS RULE as unethical contingencies.

Question 11

An appraiser prepared an appraisal report in April 2021. He testified in court regarding the value of the property in January 2022. The decision was rendered in February 2022 and was appealed in April 2022. The appellate court heard the case in January 2023 and remanded the case for reconsideration by the lower court. Final disposition of the case occurred in September 2023. At a minimum, how long must the appraiser retain the workfile?

A. September 2025
B. April 2026
C. September 2028
D. February 2024

Answer 11

B. April 2026

Rational:
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 2026 (five years after preparation) is longer than September 2025 (two years after final disposition).

Question 11

An appraiser concludes that a subject property has functional inadequacies. This conclusion is:

A. A physical characteristic and therefore not confidential
B. An assignment result and must be treated as confidential
C. A conclusion unrelated to value
D. An assignment result which may be disclosed to anyone without permission

Answer 11

B. An assignment result and must be treated as confidential

Rational:
This is an assignment result, and therefore must be treated as confidential by the appraiser.

Question 12

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?

A. Yes, as long as the report that was sent to the client was signed
B. No, a true copy must include a signature
C. Yes, because there is no USPAP requirement for an appraisal report to contain a signature
D. USPAP does not address this issue

Answer 12

B. No, a true copy must include a signature

Rational:
A true copy is a replica of the report sent to the client. Any signatures that were affixed to the original report must also exist on the copy for the workfile.

Question 13

Is an appraiser permitted by USPAP to create a workfile after transmitting the report to the client?

A. Yes
B. No
C. USPAP does not specify

Answer 13

B. No

Rational:
A workfile must be in existence prior to the issuance of any report or communication of assignment results.

Question 14

The requirement to create and maintain a workfile for an appraisal or appraisal review assignment applies to:

A. All appraisers, regardless of credential level
B. Only licensed or certified appraisers
C. Only trainees or assistants
D. Appraisers, clients, and intended users

Answer 14

A. All appraisers, regardless of credential level

Rational:
The USPAP definition of appraiser does not specify a level of licensure or certification. Under USPAP, appraisal trainees or assistants have the same workfile obligations as licensed or certified appraisers. Workfile obligations do not apply to clients and intended users.

Question 15

Which of the following laws is NOT specifically referenced in the Nondiscrimination section of the ETHICS RULE?

A. Civil Rights Act of 1866
B. Equal Credit Opportunity Act
C. Dodd-Frank Act
D. Fair Housing Act

Answer 15

C. Dodd-Frank Act

Rational:
The Fair Housing Act, the Equal Credit Opportunity Act, and the Civil Rights Act of 1866 are specifically referenced.

Question 16

If USPAP compliance is mandated by federal law, no state or local law can create a jurisdictional exception.

True
False

Answer 16

True

Rational:
USPAP states: When compliance with USPAP is required by federal law or regulation, no part of USPAP can be voided by a law or regulation of a state or local jurisdiction.

Question 17

A state passes a law requiring appraisers to keep their workfiles for 10 years after preparation. Is this a jurisdictional exception under USPAP?

A. Yes
B. No
C. USPAP does not specify

Answer 17

B. No

Rational:
This would not be considered a jurisdictional exception, because it does not preclude an appraiser from complying with USPAP. An appraiser can comply with both USPAP and the law by keeping his or her workfiles for 10 years.

Question 18

Exposure time is:

A. A fact to be found
B. An opinion developed by an appraiser
C. Unnecessary in most appraisal assignments
D. Not required to be reported

Answer 18

B. An opinion developed by an appraiser

Rational:
The definition of exposure time indicates that exposure time is an opinion developed by an appraiser.

Question 19

Which statement is TRUE regarding exposure time?

A. It is always assumed to precede the effective date of the appraisal.
B. It is always assumed to begin on the effective date of the appraisal and extend out into the future.
C. It is necessary in all appraisal assignments.

Answer 19

A. It is always assumed to precede the effective date of the appraisal.

Rational:
Exposure time is always assumed to occur prior to the effective date of the appraisal. It is only necessary when exposure time is a component of the definition of value being used.

Answer 20

Rational:

Question 21

When an appraiser provides a current value opinion on a proposed new building, he or she is utilizing a(an) _____________ that the proposed improvements are completed as of the effective date of the appraisal.

A. Hypothetical condition
B. Extraordinary assumption
C. Unethical contingency
D. Limiting condition

Answer 21

A. Hypothetical condition

Rational:
Development of a value opinion(s) for a subject property with proposed improvements in a current value appraisal involves at least one hypothetical condition, specifically that the described improvements have been completed as of the date of value.

Question 22

Which statement is TRUE regarding USPAP and the three approaches to value?

A. An appraiser must develop all three approaches to value in every appraisal assignment.
B. An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.
C. USPAP requires specific methodology for developing the cost and income approaches, but not the sales comparison approach.
D. USPAP requires that at least two of the three approaches be developed in every appraisal assignment.

Answer 22

B. An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.

Rational:
A client may request that an appraiser develop an approach to value that the appraiser considers unnecessary; this would be an assignment condition. The other statements are false.

Question 23

When developing a sales comparison approach under USPAP:

A. The appraiser must analyze such data as are available to indicate a value conclusion
B. The appraiser must consider at least three comparable sales
C. Guidelines for time and distance specified by SR 1-4 must be followed

Answer 23

A. The appraiser must analyze such data as are available to indicate a value conclusion

Rational:
USPAP only requires that an appraiser analyze such comparable sales data as are available to indicate a value conclusion.

Question 24

When analyzing the subject property’s sales and transfer history in a real property appraisal assignment, an appraiser is required by USPAP to analyze ______________.

A. All sales or transfers of the subject property that occurred within three years prior to the effective date of the appraisal
B. Only the most recent sale or transfer of the subject property, if it occurred within the last three years
C. The most recent sale or transfer of the subject property, regardless of when it occurred
D. Prior sales or transfers of both the subject and comparable properties

Answer 24

A. All sales or transfers of the subject property that occurred within three years prior to the effective date of the appraisal

Rational:
USPAP Standards Rule 1-5(b) requires analysis of a three-year subject property sales/transfer history, i.e., all sales or transfers that occurred within three years prior to the effective date of the appraisal.

Question 25

When analyzing listings of the subject property in a real property appraisal assignment, USPAP requires an appraiser to analyze, at a minimum, ____________.

A. All listings that occurred within the last three years
B. All listings that occurred within the last year
C. Current listings

Answer 25

C. Current listings

Rational:
Standards Rule 1-5(a) requires appraisers to analyze current listings and agreements. Analyzing prior listings may be an assignment condition specified by certain clients, but it is not specifically required by USPAP.

Question 26

STANDARD 2 sets forth requirements for

A. Style and format of a real property appraisal report
B. Appraisal report content
C. The use of standard appraisal forms

Answer 26

B. Appraisal report content

Rational:
USPAP states, STANDARD 2 addresses the content and level of information required in a report… STANDARD 2 does not dictate the form, format, or style.

Question 27

The use of standard appraisal reporting forms

A. Is prohibited by USPAP
B. Is mandated by STANDARD 2
C. Is not required by STANDARD 2
D. Requires approval by the ASB and AQB

Answer 27

C. Is not required by STANDARD 2

Rational:
USPAP states, STANDARD 2 addresses the content and level of information required in a report… STANDARD 2 does not dictate the form, format, or style.

Question 28

An appraiser is preparing a Restricted Appraisal Report in a situation where there are intended users in addition to the client. Which statement is true regarding this situation?

A. These additional intended users must be identified in the report by type.
B. These additional intended users must be identified in the report by name.
C. These additional intended users may be identified in the report by either name or type.
D. The appraiser has violated USPAP by using a Restricted Appraisal Report in this situation.

Answer 28

B. These additional intended users must be identified in the report by name.

Rational:
In a Restricted Appraisal Report, additional intended users must be identified by name; they may not be identified by type.

Question 29

All written appraisal reports must contain:

A. a letter of transmittal
B. a signed certification
C. adequate detail to allow any reader to understand the appraisal process
maps, sketches, and photographs

Answer 29

B. a signed certification

Rational:
A signed certification is required in all written appraisal reports, regardless of the reporting option utilized.

Question 30

According to USPAP, any appraiser who signs any part of an appraisal report is required to

A. sign the letter of transmittal
B. inspect the property
C. sign a certification
D. read the report

Answer 30

C. sign a certification

Rational:
An appraiser who signs any part of an appraisal report (including the transmittal letter) must also sign a certification.

Question 31

An appraiser provides an oral report of a real property appraisal. Which statement is CORRECT?

A. Because she gave an oral report, the appraiser does not have to sign a certification.
B. The appraiser must add a signed and dated certification to her appraisal workfile.
C. The appraiser must send a written, signed, and dated certification to the client after she provides the oral report.
D. The appraiser has no USPAP reporting obligations because she provided an oral report.

Answer 31

B. The appraiser must add a signed and dated certification to her appraisal workfile.

Rational:
When an oral appraisal report is provided, a signed and dated certification must be made part of the appraiser’s workfile.

Question 32

A trainee assisted a senior appraiser in an appraisal assignment, but the trainee appraiser does not sign a certification. The trainee’s name is stated in the certification as having provided significant appraisal assistance. Is a description of the trainee’s assistance also required to be in the certification?

A. Yes
B. No
C. USPAP is silent on this issue

Answer 32

B. No

Rational:
No. A description of your assistance or contribution to the assignment is not required in the certification. It may appear anywhere in the report.

Question 33

The subject of an appraisal review assignment may be

A. a property that had been previously valued by another appraiser
B. any work that is completed by a state licensed or certified appraiser
C. any written work that is part of appraisal practice
D. another appraiser’s work that is completed as part of an appraisal or appraisal review assignment

Answer 33

D. another appraiser’s work that is completed as part of an appraisal or appraisal review assignment

Rational:
Appraisal review is defined as (noun) the act or process of developing an opinion about the quality of another appraiser’s work (i.e., a report, part of a report, a workfile, or some combination of these) that was performed as part of an appraisal or appraisal review assignment…

Question 34

When developing an appraisal review, USPAP requires a reviewer to identify the appraiser who completed the work under review:

A. without exception
B. and work with the appraiser to correct any errors
C. and personally contact that appraiser if the reviewer has any questions
D. unless the identity has been withheld by the client

Answer 34

D. unless the identity has been withheld by the client

Rational:
A reviewer is required by Standards Rule 3-2(d)(iii) to identify the appraiser who completed the work under review, unless the identity has been withheld by the client.

Question 35

A reviewer is performing an appraisal review on an appraisal report prepared on a residential property. The reviewer is required by USPAP to:

A. Identify whether it is necessary to develop his or her own value opinion as part of the appraisal review assignment
B. Contact the appraiser who completed the work under review
C. Develop an opinion of value of the property that is the subject of the work under review
D. Inform the state appraisal enforcement agency if there are any deficiencies found in the work under review

Answer 35

A. Identify whether it is necessary to develop his or her own value opinion as part of the appraisal review assignment

Rational:
USPAP does not require a reviewer to develop an opinion of value in every appraisal review assignment. Rather, a reviewer is required to identify – for each assignment – whether it is necessary to develop this opinion in order to produce credible assignment results for the intended use.

Question 36

Which statement is TRUE regarding USPAP and the appraisal review process for real property?

A. A reviewer is required to develop his or her own opinion of value if the reviewer feels the original value is not credible.
B. If the reviewer develops his or her own opinion of value, it must be developed under the requirements of STANDARD 1.
C. In reviewing an appraisal, the reviewer is prohibited from developing or expressing an opinion of value.
D. In an appraisal review assignment, the subject of the review is the appraiser who completed the work.

Answer 36

B. If the reviewer develops his or her own opinion of value, it must be developed under the requirements of STANDARD 1.

Rational:
Appraisers may provide their own opinions as part of a review assignment. These opinions must be developed under the STANDARD that is applicable to the type of assignment. In reviewing a real property appraisal, the reviewer would develop his own opinion of value under the requirements of STANDARD 1.

Question 37

An appraisal review report

A. has no minimum content requirements under USPAP
B. must be separate from the work under review
C. must be written
D. must be prepared using a pre-printed report form

Answer 37

B. must be separate from the work under review

Rational:
Standards Rule 4-1 requires that an Appraisal Review Report must be separate from the work under review.

Question 38

A reviewer is reviewing a real property appraisal and has developed her own value opinion that differed from the value opinion in the work under review. When reporting her value opinion in the appraisal review report, what must the reviewer do?

A. State her value opinion and reference supporting information that is retained in the reviewer’s workfile
B. List the specific Standards Rules that were violated by the appraiser who completed the work under review
C. Provide data and analysis that matches the reporting requirements for an Appraisal Report
D. State “I disagree with the value conclusion in the work under review” and go no further

Answer 38

C. Provide data and analysis that matches the reporting requirements for an Appraisal Report

Rational:
Data and analyses provided by the reviewer to support a different opinion or conclusion must match, at a minimum (except the certification), the reporting requirements for an Appraisal Report for a real property appraisal (Standards Rule 2-2(a)).

Question 39

As part of an appraisal review assignment, a reviewer develops his own opinion of value that differs from the original appraiser’s value opinion. How many certifications does USPAP require in the appraisal review report for this assignment?

A. Zero
B. One
C. Two
D. Three

Answer 39

B. One

Rational:
Data and analyses provided by the reviewer to support a different opinion or conclusion must match, at a minimum, except for the certification requirements, the reporting requirements for an Appraisal Report for a real property appraisal. This only applies to the data and analyses provided by the reviewer. It does not require two certifications. Only one certification is required.

Question 40

If a reviewer provides an oral report of an appraisal review

A. a signed certification must be inserted into the workfile
B. it is not necessary that the appraiser sign a certification
C. the reviewer has violated USPAP
D. the reviewer is precluded from developing his or her own opinion of value

Answer 40

A. a signed certification must be inserted into the workfile

Rational:
If an oral review report is provided, the reviewer must insert a signed and dated certification into the workfile and comply with the requirements in the RECORD KEEPING RULE that apply to oral reports.

Question 41

Which of these examples indicates that a reviewer DID NOT develop his own opinion of value in an appraisal review assignment?

A. I reject the value conclusion as lacking credibility due to the errors and inconsistencies found.
B. I do not agree with the value conclusion.
C. I concur with the value conclusion.
D. In my opinion, the value conclusion is too high.

Answer 41

A. I reject the value conclusion as lacking credibility due to the errors and inconsistencies found.

Rational:
“I reject the value conclusion as lacking credibility due to the errors and inconsistencies found” is provided in AO-20 as language that does not indicate a reviewer developed his/her own value opinion. The other choices are listed in AO-20 as examples of language that indicate that the reviewer did develop his/her own value opinion.

Question 42

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?

A. STANDARDS 1 and 2
B. STANDARDS 5 and 6
C. STANDARDS 7 and 8
D. There are no USPAP Standards for this type of valuation

Answer 42

A. STANDARDS 1 and 2

Rational:
If the subject of an ad valorem taxation appraisal assignment is a single real property, this is an appraisal assignment which must be developed and reported under STANDARDS 1 and 2.

Question 43

In a personal property appraisal assignment that includes multiple objects as part of the same assignment:

A. All objects must have the same value
B. The objects that are more significant to the assignment results should be the focus of the analysis
C. All objects must be given the same focus regardless of their value or significance
D. An appraiser must be licensed or certified as a personal property appraiser in order to complete the assignment

Answer 43

B. All objects must be given the same focus regardless of their value or significance

Rational:
Personal property appraisals frequently involve multiple objects in a single appraisal assignment, and the value significance of these objects can vary greatly. Standards Rule 7-4(e) specifies that objects which are more significant to the assignment results should be the focus of the analysis.

Question 44

An appraiser’s certification in a business or intangible asset appraisal report does not:

A. State that the appraiser has no bias
B. State that the appraiser has prepared and reported the analysis in conformity with USPAP
C. Have to be included in a Restricted Appraisal Report
D. Contain a reference to the inspection of the subject property*

Answer 44

D. Contain a reference to the inspection of the subject property*

Rational:
The certification required by STANDARD 10 contains no reference to a personal inspection of the property, as one cannot inspect intangible assets.

Question 45

An appraisal that takes into consideration the full effect of known environmental contamination would be considered:

A. Hypothetical condition
B. Extraordinary assumption
C. “As-is”
D. Subject to remediation

Answer 45

C. “As-is”

Rational:
AO-9 states there are assignments that require an appraisal of the “as-is” condition of the property, with full consideration of the effects of environmental contamination.

Question 46

An appraiser provides raw AVM (automated valuation models) output to a client. This is:

A. Not an appraisal, and no workfile is required
B. Not an appraisal; however, a workfile is required by USPAP
C. An appraisal under STANDARDS 1 and 2
D. A violation of the ETHICS RULE

Answer 46

A. Not an appraisal, and no workfile is required

Rational:
An appraiser is not performing an appraisal assignment when he or she simply runs an AVM using client-provided information and gives the client the unaltered output. But if an appraiser modifies the AVM output, or uses the AVM in developing his or her own opinion of value, then it is an appraisal.

Question 47

Regulations and guidelines that apply to an appraisal for a federally-regulated lending transaction are:

A. Jurisdictional exceptions
B. Assignment conditions
C. Limiting conditions
D. Hypothetical conditions

Answer 47

B. Assignment conditions

Rational:
The agencies’ appraisal regulations and guidelines contain assignment conditions that are part of competent performance when they apply in an assignment.

Question 48

According to AO-33, the results of discounted cash flow (DCF) analysis should:

A. Be tested and checked for errors and reasonableness
B. Be expressed as a single-point value conclusion
C. Not be included in appraisal report
D. Not be referred to as an appraisal

Answer 48

A. Be tested and checked for errors and reasonableness

Rational:
The results of DCF analysis should be tested and checked for errors and reasonableness.

Question 49

What does the effective date of an appraisal establish?

A. The date upon which the report was prepared
B. The date the certification statement was signed
C. The context of the value opinion
D. The approximate date the appraiser can expect payment

Answer 49

C. The context of the value opinion

Rational:
Two dates are essential to an appraisal report. The date of the report indicates the perspective from which the appraiser is examining the market. The effective date of the appraisal establishes the context for the value opinion.