RAA Residential Appraisal Report Writing 1 — Questions and Answers
Question 1: Which appraisal report form is most commonly used for single-family residential properties being financed by Fannie Mae or Freddie Mac?
- URAR (Uniform Residential Appraisal Report) Form 1004 (Correct answer)
- Form 1073 (Individual Condominium Unit Appraisal Report)
- Form 2055 (Exterior-Only Inspection Residential Appraisal Report)
- Form 1025 (Small Residential Income Property Appraisal Report)
Correct answer: URAR (Uniform Residential Appraisal Report) Form 1004
The URAR Form 1004 is the standard form required by Fannie Mae and Freddie Mac for single-family residential appraisals with interior inspections.
Question 2: Under USPAP, which type of appraisal report provides the least amount of detail and is only appropriate when the client and intended users do not need a detailed explanation?
- Self-Contained Report
- Summary Report
- Restricted Use Appraisal Report (Correct answer)
- Desktop Appraisal Report
Correct answer: Restricted Use Appraisal Report
A Restricted Use Appraisal Report contains the least detail and is only appropriate for a single client who does not intend to share the report with third parties.
Question 3: When completing an appraisal report, the 'Neighborhood' section requires the appraiser to identify the neighborhood boundaries. What is the primary purpose of defining neighborhood boundaries?
- To satisfy legal requirements for boundary disclosure
- To identify the geographic area from which comparable sales are drawn (Correct answer)
- To determine the applicable zoning classifications
- To establish the tax assessment district for the subject property
Correct answer: To identify the geographic area from which comparable sales are drawn
Defining neighborhood boundaries helps identify the geographic market area from which comparable sales and market data should be drawn to ensure relevant comparisons.
Question 4: In a Uniform Residential Appraisal Report (Form 1004), the 'Contract' section requires the appraiser to analyze the sales contract. Which of the following is the appraiser required to comment on if it exists?
- The buyer's credit history and debt-to-income ratio
- Seller concessions and their effect on value (Correct answer)
- The lender's underwriting guidelines and loan terms
- The title insurance commitment and exceptions
Correct answer: Seller concessions and their effect on value
The appraiser must analyze and report on seller concessions because they can artificially inflate the contract price, affecting the appraiser's opinion of market value.
Question 5: Which section of the Form 1004 requires the appraiser to reconcile the indicated values from the approaches used and provide a final opinion of value?
- Market Conditions Addendum (Form 1004MC)
- Reconciliation section (Correct answer)
- Sales Comparison Approach grid
- Improvements section
Correct answer: Reconciliation section
The Reconciliation section is where the appraiser weighs the reliability and applicability of each approach used and arrives at a final, supported opinion of value.
Question 6: When an appraiser uses an extraordinary assumption in an appraisal report, what must be included in the report according to USPAP?
- A separate signed addendum approved by the client
- A clear statement of the assumption and how it might affect the value if found to be false (Correct answer)
- A second opinion from another certified appraiser
- A notice to the state appraisal board within 10 business days
Correct answer: A clear statement of the assumption and how it might affect the value if found to be false
USPAP requires that any extraordinary assumption be clearly stated in the report, along with a disclosure of how the assignment results might be affected if the assumption is found to be false.
Question 7: The Market Conditions Addendum (Form 1004MC) was developed primarily to provide additional information about which aspect of the market?
- Current listing inventory and price trends over the prior 12 months (Correct answer)
- Zoning changes and future development plans in the neighborhood
- The subject property's rental income potential and cap rate
- Flood zone status and environmental hazard disclosures
Correct answer: Current listing inventory and price trends over the prior 12 months
Form 1004MC was created to provide lenders and GSEs with a more detailed analysis of supply, demand, and price trends in the subject's market over the prior 12-month period.
RAA Residential Appraisal Report Writing 1
Which appraisal report form is most commonly used for single-family residential properties being financed by Fannie Mae or Freddie Mac?