Mixed Deck — All CAR Topics Flashcards

Under USPAP's Standards Rule 3-2, a reviewer must identify the work under review. What is the primary risk if this step is inadequately performed?

Answer: The reviewer may inadvertently render an opinion on a different appraisal than intended

Failing to properly identify the appraisal being reviewed can cause the reviewer to critique or rely on the wrong report, undermining the review's validity.

Which of the following is a key risk indicator when reviewing an appraisal that uses the income approach for a small residential rental property?

Answer: The vacancy rate used is below the market rate without explanation

Using a below-market vacancy rate inflates the effective gross income and resulting value, overstating collateral and increasing lender risk.

Which approach best supports quality outcomes in Foundational Concepts & Principles for Certified Appraisal Reviewer?

Answer: Systematic application of evidence-based methods

Evidence-based methods provide a reliable foundation for achieving consistent, high-quality outcomes.

A lender submits additional comparable sales to an appraiser and requests reconsideration of value. Under AIR and USPAP, the appraiser should:

Answer: Objectively evaluate the new comparables and respond with appropriate analysis

A reconsideration of value request is permissible when it provides legitimate market data; the appraiser must objectively evaluate the information and document their response.

When reviewing an appraisal that references an AVM as a reasonableness check, the appraisal reviewer should verify that the appraiser:

Answer: Disclosed the AVM as an extraordinary assumption if it materially influenced the value conclusion

If an AVM materially influences a value conclusion, USPAP may require it to be disclosed as an extraordinary assumption, since AVM accuracy cannot be personally verified by the appraiser.

When a reviewer identifies a potential USPAP violation in an appraisal, what is their first professional obligation?

Answer: Document the finding in the review report and notify the client according to the assignment conditions

The reviewer's primary obligation is to document findings in the review report and fulfill reporting obligations to the client; state board referrals may follow based on the client's direction or the reviewer's judgment about severity.

A reviewer assesses an appraisal of a special-purpose property (e.g., a church). Which limitation is most important to flag if only the cost approach was used?

Answer: The cost approach may not capture economic obsolescence from limited alternative uses

Special-purpose properties often suffer from external obsolescence due to limited demand and few alternative uses, which cost approach depreciation schedules may fail to fully capture.

Which of the following is a key limitation of relying solely on assessor's public records data when reviewing a residential appraisal?

Answer: Assessor data may lag actual market conditions and often reflects assessed value rather than market value

Public assessor records may be outdated, use mass-appraisal methodologies, and reflect taxable assessed values that do not equal market value.

When reviewing a Form 2055 (Exterior-Only Inspection) appraisal, the reviewer should recognize that this report type:

Answer: Relies on an exterior-only observation and public record data rather than an interior inspection

Form 2055 is an exterior-only inspection report where the appraiser observes the exterior and relies on public data, without inspecting the interior, making it inherently more limited in scope.

A reviewer notes that the effective date of the appraisal under review is 18 months prior to the review date. What additional consideration applies?

Answer: The reviewer must consider whether market conditions have changed materially since the effective date

When significant time has passed, reviewers must assess whether market changes affect the continued reliability of the original appraisal.

In reviewing a manufactured home appraisal, the reviewer notices the appraiser used site-built comparables without explanation. This is problematic primarily because:

Answer: Market participants typically view manufactured and site-built homes as distinct product types, and mixing them without adjustment or explanation undermines credibility

Manufactured and site-built homes appeal to different market segments and may command different prices, so using site-built comparables without addressing the difference and making appropriate adjustments weakens the appraisal.

A field review finds the subject property has a non-permitted addition. What is the primary risk impact for the lender?

Answer: The collateral value may be overstated because unpermitted space may not be insurable or financeable

Non-permitted additions may not be covered by insurance or recognized by future buyers, making the appraiser's inclusion of that space in value potentially unsupported.

Which appraisal principle is most directly applied when an appraiser uses comparable sales to estimate the subject property's value, reasoning that a buyer would pay no more than the cost of an equally desirable substitute?

Answer: Principle of Substitution

The principle of substitution is the foundation of the sales comparison approach — a rational buyer will not pay more for a property than the cost of an equally desirable alternative.

When assessing an appraisal for appraisal bias risk, a reviewer should be most alert to:

Answer: Systematic adjustment patterns that disadvantage properties in certain neighborhoods

Appraisal bias risk is evidenced by adjustment patterns that consistently produce lower values in protected-class or minority neighborhoods without market support.

When reviewing an appraisal for a property in a FEMA Special Flood Hazard Area (Zone AE), the reviewer should confirm that the appraiser:

Answer: Noted the flood zone status and analyzed its market impact on value

The appraiser must disclose the flood zone designation and analyze whether and how it affects market value through buyer perception and insurance costs.

Property data collectors (PDCs) used in hybrid appraisals are typically required to follow which measurement standard for above-grade living area?

Answer: ANSI Z765-2021 (American National Standard for Single-Family Residential Buildings)

Fannie Mae requires ANSI Z765-2021 compliance for GLA measurement in appraisals and property data collection to ensure consistent square footage reporting.

The primary purpose of a pre-funding appraisal review in a mortgage lending context is to:

Answer: Assess whether the appraisal is credible and appropriate for use in the lending decision before the loan closes

Pre-funding review is a quality control measure to confirm the appraisal's credibility and appropriateness before the lender funds the loan.

The concept that a property's value is influenced by the economic productivity remaining in its competitive life is most directly tied to which principle?

Answer: Principle of Anticipation

The principle of anticipation holds that value is the present worth of future benefits, including the remaining economic life of the improvements.

A review appraiser is asked to communicate a preliminary finding to the client before the review report is complete. The best practice is to:

Answer: Provide a written preliminary opinion with a clear statement that it may change upon full analysis

If preliminary findings are shared, they should be in writing and clearly noted as subject to change pending completion of the full review.

What does USPAP require regarding the confidentiality of assignment results in an appraisal review?

Answer: Results must not be disclosed to anyone outside the client without consent or legal authority

USPAP's Confidentiality section prohibits disclosure of assignment results to third parties without client consent or legal authority.