RAA Uniform Standards of Professional Appraisal Practice 3 — Questions and Answers
Question 1: Under USPAP, what is the primary purpose of the Scope of Work Rule?
- To define how long an appraisal report must be
- To require appraisers to identify and perform the research and analysis necessary to produce credible assignment results (Correct answer)
- To mandate the use of all three approaches to value
- To limit the types of properties an appraiser may appraise
Correct answer: To require appraisers to identify and perform the research and analysis necessary to produce credible assignment results
The Scope of Work Rule requires appraisers to identify and perform the type and extent of research necessary for credible results given the problem to be solved.
Question 2: Which section of the Ethics Rule addresses an appraiser's obligation regarding confidential assignment information?
- Conduct section
- Management section
- Confidentiality section (Correct answer)
- Record Keeping section
Correct answer: Confidentiality section
The Confidentiality section of the Ethics Rule prohibits appraisers from disclosing confidential information or assignment results to unauthorized parties.
Question 3: An appraiser is asked to provide an appraisal of a residential property for a federally related transaction. Under which standard must the appraisal be developed?
- Standard 1 only
- Standard 1 and Standard 2 (Correct answer)
- Standard 6
- Standard 9 and Standard 10
Correct answer: Standard 1 and Standard 2
Real property appraisals must be developed under Standard 1 and reported under Standard 2, including federally related transactions.
Question 4: What does USPAP define as 'extraordinary assumptions'?
- Assumptions about market conditions that differ from current reality
- Assumptions that, if found to be false, could alter the appraiser's opinions or conclusions (Correct answer)
- Assumptions required by the client that affect the scope of work
- Assumptions about the future performance of comparable sales
Correct answer: Assumptions that, if found to be false, could alter the appraiser's opinions or conclusions
An extraordinary assumption is one that, if found to be false, could alter the appraiser's opinions or conclusions, and must be disclosed prominently.
Question 5: Under USPAP, a 'hypothetical condition' differs from an 'extraordinary assumption' in that a hypothetical condition:
- Is less important and requires less disclosure
- Is known to be contrary to what exists but is used for purposes of analysis (Correct answer)
- Is an assumption about future events
- Applies only to income-producing properties
Correct answer: Is known to be contrary to what exists but is used for purposes of analysis
A hypothetical condition is contrary to what actually exists on the effective date of the appraisal and is used for analytical purposes.
Question 6: Which of the following best describes a 'client' as defined by USPAP?
- Any party who reads the appraisal report
- The party who hires and may be responsible for compensating the appraiser (Correct answer)
- All parties identified as intended users of the report
- The property owner who benefits from the appraisal
Correct answer: The party who hires and may be responsible for compensating the appraiser
USPAP defines the client as the party who engages the appraiser (by employment or contract) for a specific assignment.
Question 7: Under USPAP, what must an appraiser do when an assignment condition limits the scope of research or analysis?
- Refuse the assignment unless all research can be performed
- Disclose the limitation and ensure it does not render the appraisal misleading (Correct answer)
- Obtain written client permission and proceed without disclosure
- Perform the assignment and omit a certification
Correct answer: Disclose the limitation and ensure it does not render the appraisal misleading
Scope limitations are permitted but must be disclosed so intended users understand what was and was not performed, ensuring the report is not misleading.
RAA Uniform Standards of Professional Appraisal Practice 3
Under USPAP, what is the primary purpose of the Scope of Work Rule?