CAR Appraisal Reviewer Property Valuations 3

Question 1

When reviewing a residential appraisal, a reviewer notices the appraiser used three comparables all located in a subdivision that is considerably newer and superior to the subject's neighborhood. This raises concerns about:

Accepted Answer

Whether the comparables represent the same competitive market as the subject

Answer

Comparables should compete with the subject in the same or similar market; using comparables from a clearly superior neighborhood can result in upward-biased adjustments and an unreliable value conclusion.

Question 2

An appraiser's sales comparison approach grid shows net adjustments of -38% and gross adjustments of 62% on one comparable. Under Fannie Mae guidelines, this comparable is:

Accepted Answer

Potentially outside acceptable thresholds, warranting explanation or replacement

Answer

Fannie Mae guidelines flag comparables with net adjustments exceeding ±15% of sale price or gross adjustments exceeding 25%, and such comparables require explanation or should be replaced.

Question 3

Which appraisal approach is typically given the most weight when valuing a special-purpose property such as a church or school?

Accepted Answer

Cost approach

Answer

Special-purpose properties rarely sell and generate little market-rent data, so the cost approach is typically most reliable and given the most weight.

Question 4

In reviewing a complex commercial appraisal, the reviewer disagrees with the appraiser's value conclusion. Under USPAP Standard 3, the reviewer may:

Accepted Answer

Issue a review report that includes the reviewer's own value opinion if necessary

Answer

USPAP Standard 3 permits (and sometimes requires) the reviewer to provide their own value opinion in the review report when disagreeing with the appraiser's conclusion.

Question 5

An appraiser values a 10-unit apartment building using a gross rent multiplier (GRM) of 12, derived from three comparable sales. A reviewer's concern about this approach is that the GRM:

Accepted Answer

Does not account for differences in operating expenses between properties

Answer

GRM is a crude measure because it ignores vacancy, operating expenses, and expense ratios, which can vary widely among comparable properties.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR Appraisal Reviewer Property Valuations 3