CGA Appraisal Report Writing & Communication 2 — Questions and Answers
Question 1: A 'hypothetical condition' in an appraisal report is defined as a condition that:
- Has not yet occurred but is expected to occur within 12 months
- Is known to be contrary to existing fact but is assumed for purposes of analysis (Correct answer)
- Cannot be verified due to lack of available market data
- Represents an estimate of future market value
Correct answer: Is known to be contrary to existing fact but is assumed for purposes of analysis
A hypothetical condition is one that is known to be contrary to what exists (e.g., appraising a vacant lot as if improved) and is used for a specific analytical purpose such as an 'as completed' valuation.
Question 2: In appraisal reporting, 'reconciliation' refers to:
- Settling fee disputes between the client and the appraiser
- Correcting mathematical errors discovered after report delivery
- Weighing the results of different valuation approaches to arrive at a final value opinion (Correct answer)
- Verifying that the legal description matches public records
Correct answer: Weighing the results of different valuation approaches to arrive at a final value opinion
Reconciliation is the analytical step where the appraiser evaluates and weights the indications from each approach to value to develop a single, supported final value conclusion.
Question 3: Which element is NOT required in a USPAP-compliant appraisal report?
- The effective date of the appraisal
- The appraiser's state certification or license number
- The client's Social Security Number or tax ID (Correct answer)
- A signed certification by the appraiser
Correct answer: The client's Social Security Number or tax ID
USPAP mandates effective date, appraiser credentials, and a signed certification, but does not require the client's personal tax identification information.
Question 4: The 'effective date' of an appraisal is best described as:
- The date the final report is delivered to the client
- The date the appraiser physically inspected the property
- The specific date to which the value opinion applies (Correct answer)
- The date the appraiser was engaged for the assignment
Correct answer: The specific date to which the value opinion applies
The effective date is the specific date to which the value conclusion pertains; it may be current, retrospective, or prospective and differs from the report date.
Question 5: When an appraiser signs a report as a 'supervisory appraiser,' they are:
- Certifying they personally performed all research and the full inspection
- Accepting responsibility for the work performed by a trainee under their supervision (Correct answer)
- Conducting a peer review on behalf of a lender or AMC
- Representing the client's interests in a contested value dispute
Correct answer: Accepting responsibility for the work performed by a trainee under their supervision
A supervisory appraiser accepts full responsibility for the work of a trainee working under their supervision, even if the supervisory appraiser did not personally complete every aspect.
Question 6: Which of the following best describes the 'intended use' element required in an appraisal report?
- The purpose the appraiser had in selecting comparable sales
- The reason the client or intended users need the appraisal (Correct answer)
- The zoning classification assigned to the subject property
- The type of value approach the appraiser found most reliable
Correct answer: The reason the client or intended users need the appraisal
Intended use describes how the client and intended users plan to use the appraisal—for example, mortgage underwriting, estate settlement, or eminent domain litigation.
Question 7: Per USPAP, an appraiser must retain the workfile for an assignment for a minimum of:
- 3 years after preparation of the report
- 5 years after preparation, or 2 years after final disposition of judicial proceedings, whichever is longer (Correct answer)
- 7 years after the effective date of the appraisal
- 10 years after the report is delivered to the client
Correct answer: 5 years after preparation, or 2 years after final disposition of judicial proceedings, whichever is longer
USPAP's Record Keeping Rule requires retention of the workfile for at least five years after preparation, or at least two years after the final disposition of any judicial proceeding in which the appraiser provided testimony, whichever is longer.
CGA Appraisal Report Writing & Communication 2
A 'hypothetical condition' in an appraisal report is defined as a condition that: