USPAP REVIEW QUETSTIONS Flashcards
Which of the following statements BEST describes Advisory Opinions?
They are not part of USPAP but illustrate applicability and provide guidance.
They provide interpretation of USPAP requirements and are intended to be enforceable.
They establish supplemental standards that build upon STANDARDS 1 through 10.
They are part of USPAP, and they are the ASB’s way of addressing changes in the appraisal marketplace.
They are not part of USPAP but illustrate applicability and provide guidance.
An appraisal that takes into consideration the full effect of known environmental contamination would be considered:
“As-is”
Extraordinary assumption
Hypothetical condition
Subject to remediation
“As-Is”
True/False: The competency required to appraise subsidized housing extends beyond typical residential appraisal competency.
True
In an appraisal report, the use of terms that reflect a scale such as “good” or “average”:
Is a violation of USPAP
Is illegally discriminatory, but does not violate USPAP
Involves the use of an extraordinary assumption
Should include explanation that provides context
Should include explanation that provides context
An appraiser provides raw AVM output to a client. This is:
Not an appraisal; however, a workfile is required by USPAP
Not an appraisal, and no workfile is required
A violation of the ETHICS RULE
An appraisal under STANDARDS 1 and 2
Not an appraisal, and no workfile is required
An appraiser agrees to provide a market value appraisal for a client. Which statement is true about this situation?
It is essential that the appraiser identify the source of the definition of value to be used.
All market value definitions are essentially the same; hence they are all interchangeable.
There is only one definition of market value so it is not important to identify the definition of value to be used.
Market value is the only type of value that appraisers provide, so defining the value is unnecessary.
It is essential that the appraiser identify the source of the definition of value to be used.
Regulations and guidelines that apply to an appraisal for a federally-regulated lending transaction are:
Assignment conditions
Hypothetical conditions
Limiting conditions
Jurisdictional exceptions
Assignment conditions
If a borrower attempts to engage an appraiser to complete an appraisal for a federally-regulated lending transaction, the appraiser should disclose:
That the lender must engage the appraiser, and that the appraiser cannot later “readdress” the report
That the appraiser is too busy to perform an assignment for a borrower as the client
That the lender must directly engage the appraiser, and that the report can only be readdressed with express written permission from the lender
That the borrower is permitted to order the appraisal, and that the appraiser may later “readdress” the report, if needed
That the lender must engage the appraiser, and that the appraiser cannot later “readdress” the report
Developing an opinion of value of a property as of a specified future date is:
A prospective appraisal
The most common type of appraisal
A retrospective appraisal
Not permissible under USPAP
A prospective appraisal
What type of appraisal would be indicated by the phrase, “On September 10, 2012, the market value of the subject property was $200,000”?
Retrospective
Concurrent
Prospective
None of these
Retrospective
What does the effective date of an appraisal establish?
The date the certification statement was signed
The date upon which the report was prepared
The context of the value opinion
The approximate date the appraiser can expect payment
The context of the value opinion
According to AO-33, the results of discounted cash flow (DCF) analysis should:
Be tested and checked for errors and reasonableness
Which of these would be considered an example of a jurisdictional exception in an appraisal assignment?
A client requesting a specific definition of value
An attorney asking an appraiser not to analyze the prior sales history of the subject property
A probate court paying appraisers based on the value of the subject property
State regulations requiring appraisers to keep workfiles for six years
A probate court paying appraisers based on the value of the subject property
When does a jurisdictional exception occur in an assignment?
It is automatic when a law precludes compliance with a part of USPAP
The state enforcement agency must approve of the exception to USPAP compliance
The client must invoke the Rule
The appraiser must invoke the Rule
It is automatic when a law precludes compliance with USPAP
A state passes a law requiring appraisers to keep their workfiles for 10 years after preparation. Is this a jurisdictional exception under USPAP?
No
USPAP does not specify
Yes
No
Is it permissible to use instructions from an attorney as a basis for a jurisdictional exception?
Yes
USPAP does not specify
No
No
If USPAP compliance is mandated by federal law, no state or local law can create a jurisdictional exception.
False
True
True
What is the Jurisdictional Rule
If any applicable law or regulation precludes (prevent from happening) compliance with any part of USPAP, only that part of USPAP becomes void for that assignment.
What is the purpose of the JURISDICTIONAL EXCEPTION RULE?
To provide state appraisal regulatory agencies additional enforcement powers
To allow USPAP to preempt existing laws and regulations
To provide a saving or severability clause to preserve the balance of USPAP
To provide a saving or severability clause to preserve the balance of USPAP
Which entity writes, amends, and interprets USPAP?
The ASB
An assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP.
Jurisdictional Exception
The use of the JURISDICTIONAL EXCEPTION RULE in an assignment is a matter of choice by an appraiser.
True
False
False
If an assignment involves a jurisdictional exception, what must an appraiser do?
Identify the law, comply with the law, disclose in the report the part of USPAP that is voided, and cite in the report the law that caused the jurisdictional exception
Include a copy of the applicable law or regulation as an addendum to the appraisal, appraisal review, or appraisal consulting report
Nothing; the law automatically supersedes USPAP and eliminates any need for disclosure
Identify the law, comply with the law, disclose in the report the part of USPAP that is voided, and cite in the report the law that caused the jurisdictional exception
What’s the difference between an extraordinary assumption and hypothetical condition
An extraordinary assumption is an assumption which if found to be false could alter the resulting opinion or conclusion. A hypothetical condition is an assumption made contrary to fact, but which is assumed for the purpose of discussion, analysis, or formulation of opinions.
An unacceptable assignment condition would be a condition that:
Limits report content, resulting in a misleading report
Precludes an appraiser’s impartiality
Limits the scope of work to the extent that the value opinion is not credible
All of these
All of these
Are FAQ’s and Advisory Opinions part of USPAP?
No
When analyzing the subject property’s sales history in a real property appraisal assignment, an appraiser is required by USPAP to analyze ______________.
All sales of the subject property that occurred within three years prior to the effective date of the appraisal
Who is responsible for issuing credentials to individual appraisers? State appraisal regulatory agencies Appraisal Practices Board (APB) Appraiser Qualifications Board (AQB) Appraisal Subcommittee (ASC)
State appraisal regulatory agencies
Which is NOT a responsibility of the Appraisal Subcommittee (ASC)?
- Overseeing each state’s appraiser licensing and certification program
- Maintaining a National Registry of licensed and certified appraisers
- Monitoring the practices, procedures, and activities of -The Appraisal Foundation
- Writing, interpreting, and amending USPAP
Writing, interpreting, and amending USPAP
Why are USPAP Advisory Opinions issued? To offer advice To interpret existing standards To revise existing standards To establish new appraisal standards
To offer advice
USPAP is enforced by:
State appraiser licensing/certification agencies
The Federal Financial Institutions Examination Council (FFIEC)
Appraisal Standards Board (ASB)
Appraisal Subcommittee (ASC)
State appraiser licensing/certification agencies
What is the stated purpose of USPAP?
Establish a federal appraisal enforcement agency
Establish requirements that licensed and certified appraisers must follow
Promote and maintain a high level of public trust in appraisal practice
Create requirements so stringent that no appraiser can possibly comply with them
Promote and maintain a high level of public trust in appraisal practice
When obligated by law or regulation, an appraiser \_\_\_\_\_\_\_ comply with USPAP. Need not Must May choose to Should
Must
To which property types does USPAP apply?
Intangible property only
Tangible property only
None of these answers
Both tangible and intangible property
Both tangible and intangible property
The PREAMBLE states that USPAP intended to benefit:
Users of appraisal services only
Appraisers only
Appraisers and users of appraisal services
Borrowers in mortgage-lending appraisal assignments
Appraisers and users of appraisal services
The requirement for USPAP compliance in an appraisal assignment could be the result of:
Agreement with the client
Any of these answers
Voluntary choice by the appraiser
Law or regulation
Any of these answers
An appraiser has the professional responsibility to identify the capacity in which he or she is performing.
True
False
True
A valuation service that is premised upon advocacy:
- Must be performed under the SCOPE OF WORK RULE
- Is an appraisal review assignment under STANDARDS 3 and 4
- It cannot be performed by an individual acting as an appraiser
- Can be performed by an individual acting as an appraiser with appropriate disclosure
It cannot be performed by an individual acting as an appraiser
When performing valuation services outside of appraisal practice, an individual must be careful not to __________ the client and other intended users about his or her role.
Communicate with
Identify
Mislead
Mislead
USPAP states that in a situation when an individual is not required by law, regulation, or agreement to comply with USPAP:
- Compliance does not matter because clients do not understand USPAP
- The individual should comply only if the service involves real property
- The individual should still comply when he or she is acting as an appraiser
- The Appraisal Foundation can still force compliance
The individual should still comply when he or she is acting as an appraiser
A preference or inclination that precludes an appraiser's impartiality, independence, or objectivity is: Bias Assumption Appraisal practice Market value
Bias
An appraiser is permitted to be biased when performing an appraisal, as long as the bias is properly disclosed.
True
False
False
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
A limiting condition
An extraordinary assumption
An assumption
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: A hypothetical condition An extraordinary assumption An assignment condition A limiting condition
Extraordinary Assumption
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?
Cost
Price
Value
Price
“The monetary relationship between properties and those who buy, sell or use those properties” is the definition of: Value None of these Price Cost
Value
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:
Value
Price
Cost
Cost
According to USPAP, the party or parties who engage an appraiser in a specific assignment defines the: Party who pays the fee Other intended users Client Appraiser's peers
Client
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.
Client
the client and any other party as identified, by name or type, as users of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment.
Intended User
An intended user is:
Anyone who uses the appraisal report
A party who is identified by the appraiser based on communication with the client at the time of the assignment
Anyone who receives the appraisal report from the client
Only the party who pays for the appraisal report
A party who is identified by the appraiser based on communication with the client at the time of the assignment
Who is responsible for making the identification of the intended use in an assignment? The client The Appraisal Standards Board The appraiser The intended users themselves
The Appraiser
A real estate broker completes a Comparative Market Analysis (CMA) on a property that she wants to list for sale. What would this be considered?
An appraisal
A valuation service
Not an appraisal, but still part of appraisal practice
A USPAP service
Valuation Service
Which is the broader category of services?
Appraisal Practice
Valuation Services
Valuation services
Appraisal practice includes only:
Market value appraisals
Work completed by licensed and certified appraisers
Appraisal and appraisal review
Valuation services provided by an individual acting as an appraiser
Valuation services provided by an individual acting as an appraiser
"The type and extent of research and analyses in an appraisal or appraisal review assignment” is the definition of \_\_\_\_\_\_\_\_\_\_\_. Signature Report Intended use Scope of work
Scope of Work
In USPAP, each Standard is composed of: Standards Rules Statements on Appraisal Standards Practical advice Voluntary guidance
Standards Rules
The ethical obligations of USPAP apply to: Appraisal clients All of the answers listed Individual appraisers Appraisal companies
Individual Appraisers