RPA Report Writing & Ethical Standards 4 — Questions and Answers
Question 1: A 'hypothetical condition' in an appraisal differs from an extraordinary assumption in that it:
- Assumes something known to be false as if it were true for the purpose of analysis (Correct answer)
- Assumes an uncertain fact is true without verification
- Limits the appraiser's liability for inaccurate data
- Reflects the most probable use of the property
Correct answer: Assumes something known to be false as if it were true for the purpose of analysis
A hypothetical condition is used when the appraiser assumes something that is contrary to fact, such as analyzing a vacant lot as if it were improved.
Question 2: When reporting the results of a real property appraisal, the appraiser must:
- Clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions (Correct answer)
- Use only the Appraisal Report format regardless of client needs
- Provide a minimum of two approaches to value in every report
- Attach MLS data sheets for all comparable sales used
Correct answer: Clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions
USPAP Standard 2 requires clear and accurate disclosure of all assumptions, extraordinary assumptions, hypothetical conditions, and limiting conditions that affect the assignment results.
Question 3: Which statement about oral appraisal reports is accurate under USPAP?
- Oral reports must be substantiated by work file documentation sufficient to support the conclusions (Correct answer)
- Oral reports are not recognized under USPAP and are always prohibited
- Oral reports eliminate the need for a certification
- Oral reports may only be given for non-federally related transactions
Correct answer: Oral reports must be substantiated by work file documentation sufficient to support the conclusions
USPAP permits oral reports but requires the appraiser to maintain a work file that supports the opinions and conclusions communicated orally.
Question 4: The USPAP Record Keeping Rule requires appraisers to retain work files for a minimum of:
- Five years after preparation or two years after final disposition of any judicial proceeding, whichever is later (Correct answer)
- Three years after the date of the appraisal report
- Seven years for federally related transactions only
- One year after the report is delivered to the client
Correct answer: Five years after preparation or two years after final disposition of any judicial proceeding, whichever is later
USPAP requires work files to be retained for at least five years after preparation or two years after final judicial disposition, whichever is later.
Question 5: An appraiser signs a report as a 'supervisory appraiser.' This means the supervisory appraiser:
- Accepts responsibility for the report and the work of the trainee appraiser (Correct answer)
- Has independently verified all data collected by the trainee
- Is legally liable only for the sections they personally prepared
- Must conduct a separate inspection without the trainee present
Correct answer: Accepts responsibility for the report and the work of the trainee appraiser
A supervisory appraiser's signature indicates acceptance of full responsibility for the appraisal report and the trainee's work used in it.
Question 6: Which of the following best describes 'intended use' in an appraisal assignment?
- The purpose for which the client or other intended users will use the appraisal (Correct answer)
- The approach to value the appraiser selects as most reliable
- The geographic market area analyzed in the report
- The type of value sought, such as market value or insurable value
Correct answer: The purpose for which the client or other intended users will use the appraisal
Intended use describes the specific purpose for which the client or other identified users will employ the appraisal, such as mortgage lending or estate settlement.
Question 7: An appraiser who issues a report with a predetermined value conclusion is violating which section of the Ethics Rule?
- Conduct (Correct answer)
- Confidentiality
- Management
- Record Keeping
Correct answer: Conduct
The Conduct section of the Ethics Rule prohibits appraisers from performing assignments with a predetermined, biased outcome.
RPA Report Writing & Ethical Standards 4
A 'hypothetical condition' in an appraisal differs from an extraordinary assumption in that it: