USPAP USPAP General 3 — Questions and Answers
Question 1: The USPAP Standards Rule 2-2 requires that an Appraisal Report contain, at minimum, which of the following?
- A complete description of all three approaches to value
- Sufficient information to enable the client to understand the report and not be misled (Correct answer)
- A signed certification and a minimum of 50 pages of supporting data
- An income capitalization analysis for all property types
Correct answer: Sufficient information to enable the client to understand the report and not be misled
An Appraisal Report must contain sufficient information to enable the intended users to understand it and not be misled, regardless of length.
Question 2: Under USPAP, the term 'extraordinary assumption' is defined as an assumption that:
- Is contrary to known facts about the property
- Is directly related to a specific assignment and presumes uncertain information as fact (Correct answer)
- Requires the appraiser to ignore legal restrictions on the property
- Assumes the property is in a different physical condition than observed
Correct answer: Is directly related to a specific assignment and presumes uncertain information as fact
An extraordinary assumption presumes uncertain information as fact; if found false, it could alter the appraiser's opinions or conclusions.
Question 3: A 'hypothetical condition' under USPAP is a condition that is:
- Assumed to exist in the future
- Contrary to what exists but used for purposes of analysis (Correct answer)
- An assumption about market conditions
- A condition the client requests without factual basis
Correct answer: Contrary to what exists but used for purposes of analysis
A hypothetical condition is contrary to known facts and is used in an assignment for analytic purposes, such as appraising a property as if built.
Question 4: USPAP's Record Keeping Rule requires an appraiser to retain work file records for at minimum:
- Two years from the date of the report
- Five years from the date of the report or two years after final disposition of any legal proceeding, whichever is longer (Correct answer)
- Ten years from the date of completion
- One year from the date the client receives the report
Correct answer: Five years from the date of the report or two years after final disposition of any legal proceeding, whichever is longer
The Record Keeping Rule requires retention for at least five years after preparation or two years after final legal disposition, whichever is longer.
Question 5: Which USPAP standard governs the development and reporting of a real property appraisal review?
- Standard 1 and Standard 2
- Standard 3 and Standard 4 (Correct answer)
- Standard 5 and Standard 6
- Standard 7 and Standard 8
Correct answer: Standard 3 and Standard 4
Standard 3 covers the development of a real property appraisal review, and Standard 4 covers reporting that review.
Question 6: Under the USPAP Competency Rule, if an appraiser lacks the knowledge or experience for an assignment, the appraiser must:
- Decline the assignment without exception
- Disclose the lack of competency to the client before accepting or within the report, and acquire the necessary competency (Correct answer)
- Complete the assignment and note the deficiency only in the workfile
- Refer the assignment to another appraiser without notifying the client
Correct answer: Disclose the lack of competency to the client before accepting or within the report, and acquire the necessary competency
The Competency Rule requires disclosure to the client and acquisition of necessary competency before completing the assignment.
Question 7: A 'workfile' under USPAP must contain, at a minimum:
- Only the final signed appraisal report
- The name of the client, copies of written reports, and all data, information, and documentation necessary to support the appraiser's opinions (Correct answer)
- Copies of the client's instructions and the appraiser's invoice
- Photos of the subject property and comparable sales only
Correct answer: The name of the client, copies of written reports, and all data, information, and documentation necessary to support the appraiser's opinions
The workfile must contain the client's name, copies of reports, and all supporting data and documentation necessary to reconstruct the assignment.
USPAP USPAP General 3
The USPAP Standards Rule 2-2 requires that an Appraisal Report contain, at minimum, which of the following?