Appraisal Reviewer Property Valuations Flashcards
7 cards from real CAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Appraisal Reviewer Property Valuations flashcards as text
When reviewing an appraisal using the income capitalization approach, which factor most directly affects the capitalization rate selected by the appraiser?
Answer: Market-derived investor yield expectations and risk
Capitalization rates are market-derived and reflect investor yield expectations, risk, and alternative investment returns for similar properties.
A reviewer finds that an appraiser used paired sales analysis to extract an adjustment for a swimming pool. What is the primary concern if only two paired sales were used?
Answer: Two pairs may be insufficient to account for other variables that differ between the pairs
A single paired sale or two pairs may not isolate the feature's contribution because other differing variables can distort the extracted adjustment.
Under USPAP, an appraisal reviewer who signs a review report as a reviewer is certifying that:
Answer: The review was performed in compliance with applicable standards
By signing the review report, the reviewer certifies that the review was performed according to applicable USPAP Standards and the reviewer's professional judgment.
An appraiser reports a site value of $180,000 using only one land sale that occurred 18 months ago. As a reviewer, your primary concern should be:
Answer: Insufficient market evidence and potential time-trend adjustments needed
A single land sale from 18 months ago raises concerns about adequacy of market support and whether a time adjustment for market conditions was applied.
Which of the following best describes the concept of 'effective age' as used in the cost approach?
Answer: The age the improvements appear to be based on condition and utility, regardless of actual age
Effective age reflects how old a structure appears based on its condition, maintenance, and functional utility, and may differ significantly from its actual chronological age.
During a desk review of a commercial appraisal, the reviewer notes the appraiser applied an 8% overall capitalization rate while market data indicates rates are between 6.5% and 7.2%. This discrepancy most likely indicates:
Answer: The value conclusion may be understated if market cap rates are lower than what was applied
A higher cap rate produces a lower value indication, so applying an 8% rate when market evidence supports 6.5%-7.2% would tend to understate the property's value.
A field review requires the reviewer to do which of the following that a desk review does not?
Answer: Inspect the subject property and comparables
A field review includes an exterior (and sometimes interior) inspection of the subject property and comparable sales, which is not required in a desk review.