IACP Reporting Standards & Documentation Practices 4 — Questions and Answers
Question 1: Which USPAP Standards Rule governs the written appraisal report for real property?
- Standards Rule 1-2
- Standards Rule 2-2 (Correct answer)
- Standards Rule 3-1
- Standards Rule 4-1
Correct answer: Standards Rule 2-2
Standards Rule 2-2 specifies the content requirements for each type of written real property appraisal report.
Question 2: An appraisal report that states 'The value conclusion is subject to the completion of repairs per the plans and specifications provided' is using which type of condition?
- Extraordinary assumption
- Hypothetical condition (Correct answer)
- Limiting condition
- Scope of work condition
Correct answer: Hypothetical condition
Appraising 'as completed' per plans treats a future state as if it existed at the effective date, which is a hypothetical condition.
Question 3: The intended use of an appraisal must be stated in the report because it:
- Determines the fee the appraiser may charge
- Defines the problem the appraisal is designed to solve (Correct answer)
- Specifies the data sources to be consulted
- Establishes the required holding period
Correct answer: Defines the problem the appraisal is designed to solve
The intended use frames the appraisal problem and determines what type of analysis and report content is appropriate.
Question 4: In residential appraisal practice, the Uniform Appraisal Dataset (UAD) standardizes:
- Zoning classifications nationwide
- Field entries and condition/quality ratings on GSE forms (Correct answer)
- Fee schedules for appraisal management companies
- Minimum education requirements for appraisers
Correct answer: Field entries and condition/quality ratings on GSE forms
The UAD establishes standardized definitions and formats for specific fields on Fannie Mae and Freddie Mac appraisal forms.
Question 5: When comparables are located outside the subject's immediate neighborhood, the appraiser must:
- Obtain client approval before using them
- Explain why proximate comparables were insufficient (Correct answer)
- Apply a mandatory location adjustment of at least 10%
- Use only those sales as a separate reconciliation
Correct answer: Explain why proximate comparables were insufficient
Using distant comparables requires the appraiser to explain why adequate sales within the neighborhood were unavailable.
Question 6: Which document type would contain the raw data, calculations, and supporting information behind a completed appraisal report?
- Appraisal review
- Workfile (Correct answer)
- Letter of engagement
- Compliance file
Correct answer: Workfile
The workfile contains all data, information, and documentation necessary to support the appraiser's opinions and conclusions.
Question 7: USPAP requires the appraiser to disclose prior services on the subject property performed within the past three years because:
- Fees paid must be reported to the IRS
- It helps users evaluate potential bias or conflicts (Correct answer)
- State law requires it for all transactions
- It determines the applicable depreciation schedule
Correct answer: It helps users evaluate potential bias or conflicts
Prior service disclosure allows intended users to assess whether past involvement could affect the appraiser's objectivity.
IACP Reporting Standards & Documentation Practices 4
Which USPAP Standards Rule governs the written appraisal report for real property?