CRPA Relocation Appraisal Methodology & Terminology 5 — Questions and Answers
Question 1: In a relocation appraisal, the concept of 'time adjustment' (market conditions adjustment) is applied when:
- The subject property has been listed for an unusually long time
- Comparable sales occurred under different market conditions than the effective date of the appraisal (Correct answer)
- The transferee requests the appraisal be rushed
- The property is located in a different school district than the comparables
Correct answer: Comparable sales occurred under different market conditions than the effective date of the appraisal
Time adjustments compensate for market appreciation or depreciation between the date of a comparable sale and the effective date of the subject appraisal.
Question 2: Which of the following scenarios would trigger a 'hypothetical condition' in a relocation appraisal?
- Using a comparable sale from an adjacent zip code
- Valuing a property 'as if' a proposed renovation were complete when it has not been started (Correct answer)
- Selecting three comparables instead of five
- Using an automated valuation model to support the value conclusion
Correct answer: Valuing a property 'as if' a proposed renovation were complete when it has not been started
A hypothetical condition assumes something known to be false as of the effective date, such as treating incomplete or non-existent improvements as if they exist.
Question 3: When appraising a unique or custom-built home with few market comparables, which supplemental approach provides the strongest support in a relocation appraisal?
- Income approach using gross rent multipliers
- Cost approach to establish a value floor alongside available sales (Correct answer)
- Automated valuation model (AVM) output
- Assessment ratio analysis from the county tax roll
Correct answer: Cost approach to establish a value floor alongside available sales
For custom or unique homes with limited comparables, the cost approach helps establish a value benchmark to support or reconcile the sales comparison conclusion.
Question 4: The ERC relocation appraisal form requires appraisers to provide a 'probable range of value' primarily to:
- Replace the single-point value conclusion required by USPAP
- Give the relocation company context for offer and negotiation decisions (Correct answer)
- Satisfy IRS documentation requirements for the transfer
- Estimate the property's insurable replacement cost
Correct answer: Give the relocation company context for offer and negotiation decisions
The probable range reflects market value variability and helps relocation companies make informed decisions about offers and counteroffers.
Question 5: A 'net adjustment' percentage in the sales comparison approach is calculated by:
- Dividing the gross adjustments by the sale price of the comparable
- Dividing the sum of all signed adjustments (positive minus negative) by the unadjusted sale price (Correct answer)
- Adding all positive adjustments and ignoring negative ones
- Multiplying the cost of each feature by a market extraction factor
Correct answer: Dividing the sum of all signed adjustments (positive minus negative) by the unadjusted sale price
Net adjustment percentage equals net dollar adjustments (positives minus negatives) divided by the comparable's unadjusted sale price.
Question 6: Under USPAP, a relocation appraiser who discovers a material error in a completed appraisal report must:
- Notify only the transferee and keep the client uninformed
- Correct the error and reissue the report, notifying all parties who received the original (Correct answer)
- Discard the original and issue a new assignment with a new effective date
- Take no action if the error did not change the final value conclusion
Correct answer: Correct the error and reissue the report, notifying all parties who received the original
USPAP requires appraisers to correct material errors and notify all parties who relied on the original report, regardless of whether the value conclusion changes.
Question 7: Which of the following best explains why relocation appraisers must avoid using listings (not closed sales) as primary comparables?
- Listings are not accessible through the MLS
- Listings represent asking prices, not confirmed transaction prices reflecting actual market behavior (Correct answer)
- Listings are only appropriate for the income approach
- Relocation companies prohibit listing data in all ERC reports
Correct answer: Listings represent asking prices, not confirmed transaction prices reflecting actual market behavior
Active listings show what sellers hope to receive, not what buyers have actually paid, so they do not confirm market value as reliably as closed sales.
CRPA Relocation Appraisal Methodology & Terminology 5
In a relocation appraisal, the concept of 'time adjustment' (market conditions adjustment) is applied when: