USPAP USPAP Competency Rule 1 — Questions and Answers
Question 1: The USPAP Competency Rule requires an appraiser to have competency in which of the following before accepting an assignment?
- Tax assessment procedures only
- Geographic area, property type, and relevant market conditions (Correct answer)
- Federal tax regulations
- Mortgage underwriting guidelines
Correct answer: Geographic area, property type, and relevant market conditions
The Competency Rule requires appraisers to have knowledge and experience with the specific property type, geographic area, and market conditions relevant to the assignment.
Question 2: Under the USPAP Competency Rule, if an appraiser lacks the necessary competency for an assignment, they must:
- Decline the assignment immediately without exception
- Disclose the lack of competency to the client before accepting, and take steps to acquire it (Correct answer)
- Complete the assignment and then disclose the deficiency
- Transfer the assignment to another appraiser without notifying the client
Correct answer: Disclose the lack of competency to the client before accepting, and take steps to acquire it
The Competency Rule requires prior disclosure to the client of any lack of competency and describes steps the appraiser will take to become competent.
Question 3: Which of the following would satisfy the USPAP Competency Rule when an appraiser lacks experience with a specialized property type?
- Relying solely on online databases
- Associating with a competent appraiser on the assignment (Correct answer)
- Reducing the scope of work to avoid the unfamiliar area
- Completing the assignment and attending a seminar afterward
Correct answer: Associating with a competent appraiser on the assignment
One acceptable method to gain competency is to associate with another appraiser who has the requisite expertise for the specific assignment.
Question 4: The Competency Rule applies to which aspects of an appraisal assignment?
- Only the property inspection phase
- All aspects, including property type, market area, and required analytical methods (Correct answer)
- Only the report writing phase
- Only geographic competency
Correct answer: All aspects, including property type, market area, and required analytical methods
The Competency Rule applies to every aspect of the assignment — the property type, the geographic area, and any analytical techniques or methods required.
Question 5: An appraiser with extensive residential experience is asked to appraise a large industrial warehouse. Under USPAP, the appraiser should:
- Complete the assignment using residential methods
- Decline without any obligation to disclose why
- Disclose the competency issue to the client and take steps to acquire the needed expertise (Correct answer)
- Accept and charge a higher fee to compensate for the difficulty
Correct answer: Disclose the competency issue to the client and take steps to acquire the needed expertise
When lacking competency for a specific assignment, USPAP requires prior disclosure to the client and a plan to acquire the necessary expertise.
Question 6: Under USPAP, 'competency' primarily refers to:
- The appraiser's state license level
- The knowledge, experience, and judgment required for a specific assignment (Correct answer)
- The number of appraisals completed in a calendar year
- Membership in a professional appraisal organization
Correct answer: The knowledge, experience, and judgment required for a specific assignment
USPAP defines competency as having the knowledge, experience, and judgment necessary to complete a specific assignment credibly.
USPAP USPAP Competency Rule 1
The USPAP Competency Rule requires an appraiser to have competency in which of the following before accepting an assignment?