CGA Appraisal Report Writing & Communication 1 — Questions and Answers
Question 1: According to current USPAP, what are the two types of written real property appraisal reports?
- Self-Contained Report and Summary Report
- Appraisal Report and Restricted Appraisal Report (Correct answer)
- Complete Report and Limited Report
- Narrative Report and Form Report
Correct answer: Appraisal Report and Restricted Appraisal Report
USPAP Standards Rule 2-2 (effective 2014) consolidated reporting options into two types: Appraisal Report and Restricted Appraisal Report.
Question 2: A Restricted Appraisal Report under USPAP is appropriate when:
- The client is a federal government agency
- The intended use involves complex commercial analysis
- The intended users are limited to the client only (Correct answer)
- The subject property is residential real estate
Correct answer: The intended users are limited to the client only
A Restricted Appraisal Report may only be used when the client is the sole intended user, since it contains less detail than a standard Appraisal Report.
Question 3: Which of the following must be stated in every written appraisal report per USPAP?
- The appraiser's compensation for the assignment
- The type and definition of value and its source (Correct answer)
- A list of all comparable sales considered
- The client's intended purchase price
Correct answer: The type and definition of value and its source
USPAP requires every appraisal report to identify the type and definition of value being estimated, along with the source of that definition.
Question 4: In an appraisal report, the scope of work disclosure must include:
- The appraiser's hourly billing rate
- A description of the research and analyses performed (Correct answer)
- The names of all market participants interviewed
- The client's intended disposition of the property
Correct answer: A description of the research and analyses performed
USPAP's Scope of Work Rule requires disclosure of the research and analyses performed so the reader understands the basis for the appraiser's value conclusion.
Question 5: What is the primary purpose of 'limiting conditions' in an appraisal report?
- To cap the appraiser's liability at a set dollar amount
- To restrict distribution of the report to third parties
- To disclose assumptions made where actual facts were unavailable or unverified (Correct answer)
- To limit the property's marketability on the open market
Correct answer: To disclose assumptions made where actual facts were unavailable or unverified
Limiting conditions clarify assumptions the appraiser relied upon (e.g., no undisclosed environmental issues) that bound the scope and reliability of the value opinion.
Question 6: Which Fannie Mae/Freddie Mac form is the standard report for single-family residential appraisals submitted to GSE lenders?
- Form 1073 (Individual Condominium Unit)
- Form 1004 (Uniform Residential Appraisal Report) (Correct answer)
- Form 2055 (Exterior-Only Inspection)
- Form 1007 (Single Family Comparable Rent Schedule)
Correct answer: Form 1004 (Uniform Residential Appraisal Report)
The Uniform Residential Appraisal Report (URAR), Form 1004, is the standard GSE form required for single-family residential property appraisals submitted to Fannie Mae and Freddie Mac.
Question 7: When an appraiser uses an extraordinary assumption, USPAP requires them to:
- Obtain written approval from the state appraisal board before proceeding
- State the assumption and note it could alter the value conclusion if found false (Correct answer)
- Obtain a co-signature from a second certified appraiser
- Refuse to issue a value opinion until the assumption is confirmed
Correct answer: State the assumption and note it could alter the value conclusion if found false
USPAP requires the appraiser to clearly state any extraordinary assumption used and to acknowledge that if the assumption is found to be false, it could alter the conclusions or opinions.
CGA Appraisal Report Writing & Communication 1
According to current USPAP, what are the two types of written real property appraisal reports?