IACP Reporting Standards & Documentation Practices 3 — Questions and Answers
Question 1: USPAP Standards Rule 2-1 requires that each written appraisal report contain sufficient information to:
- Replicate the appraisal independently
- Allow the intended users to understand the report properly (Correct answer)
- Pass secondary market review requirements
- Satisfy IRS documentation standards
Correct answer: Allow the intended users to understand the report properly
SR 2-1 requires that the report contain information sufficient for the intended users to understand it and not be misleading.
Question 2: In an appraisal report, the reconciliation section serves to:
- Adjust comparable sales for differences
- Summarize the cost approach calculations
- Weigh the approaches to value and support the final opinion (Correct answer)
- List all sources of data used
Correct answer: Weigh the approaches to value and support the final opinion
Reconciliation is where the appraiser weighs the results of each approach applied and explains the reasoning supporting the final value conclusion.
Question 3: Which of the following is NOT typically required in the certification section of an appraisal report?
- Statement of personal inspection
- Disclosure of prior services on the subject
- Names of all data sources consulted (Correct answer)
- Statement of independence from the outcome
Correct answer: Names of all data sources consulted
While data sources should be documented in the report body, a list of all sources is not a required element of the USPAP certification itself.
Question 4: If an appraiser uses an automated valuation model (AVM) as a tool in the appraisal process, the AVM output must be:
- Disclosed and analyzed, not blindly adopted (Correct answer)
- Submitted to the client as a separate exhibit
- Treated as a comparable sale adjustment
- Approved by a supervisory appraiser
Correct answer: Disclosed and analyzed, not blindly adopted
AVM results are tools that must be disclosed and critically analyzed rather than uncritically adopted as the value conclusion.
Question 5: A Restricted Appraisal Report may be distributed to parties other than the client only when:
- The state licensing board requests it
- The client authorizes expanded distribution in writing (Correct answer)
- The report is more than two years old
- The appraisal is for non-lending purposes
Correct answer: The client authorizes expanded distribution in writing
Distribution of a Restricted Appraisal Report beyond the named client requires the client's written authorization.
Question 6: Under USPAP, an oral appraisal report must:
- Be followed by a written Summary Report within 30 days
- Be documented in the appraiser's workfile (Correct answer)
- Receive client acknowledgment via signed letter
- Only be used for non-federally related transactions
Correct answer: Be documented in the appraiser's workfile
Oral reports are permissible but must be documented in the workfile to support the opinion expressed.
Question 7: When an appraiser identifies a condition that may affect value but cannot be inspected (e.g., behind finished walls), the appropriate reporting action is to:
- Omit the condition from the report
- Note the condition and recommend a specialist inspection (Correct answer)
- Adjust value downward by an estimated amount
- Decline the assignment until inspection is possible
Correct answer: Note the condition and recommend a specialist inspection
The appraiser should disclose the observed condition, note the limitation, and recommend a qualified specialist for further evaluation.
IACP Reporting Standards & Documentation Practices 3
USPAP Standards Rule 2-1 requires that each written appraisal report contain sufficient information to: