USPAP USPAP Residential Appraiser 4 — Questions and Answers
Question 1: Under USPAP, 'market value' as used in most residential appraisals assumes all of the following EXCEPT:
- The buyer and seller are typically motivated
- Payment is made in cash or equivalent financing terms
- The property has been on the market for an unlimited time period (Correct answer)
- Both parties are well-informed and acting in their best interest
Correct answer: The property has been on the market for an unlimited time period
Market value assumes a reasonable exposure time in the open market, not an unlimited time period.
Question 2: Which of the following is considered a violation of USPAP's Conduct section of the Ethics Rule?
- Accepting an assignment with a contingent fee based on a predetermined value (Correct answer)
- Charging a flat fee regardless of property complexity
- Using a trainee to complete field work under supervision
- Declining an assignment due to a potential conflict of interest
Correct answer: Accepting an assignment with a contingent fee based on a predetermined value
Accepting a fee contingent on a predetermined value conclusion is explicitly prohibited by the Conduct section of the Ethics Rule.
Question 3: A residential appraiser develops an appraisal for a property subject to a 10-year ground lease. Under USPAP, this situation most likely requires the appraiser to:
- Appraise only the leased fee interest unless instructed otherwise
- Disclose the lease as a hypothetical condition
- Identify and appraise the specific property rights being appraised (Correct answer)
- Exclude the income approach since it is a residential property
Correct answer: Identify and appraise the specific property rights being appraised
USPAP requires the appraiser to identify the real property interest (e.g., fee simple, leased fee, leasehold) being appraised in every assignment.
Question 4: Under USPAP, which entity is responsible for establishing the minimum scope of work for an appraisal assignment?
- The client or intended user
- The appraiser, based on the problem to be solved (Correct answer)
- The Appraisal Foundation
- The state appraisal regulatory board
Correct answer: The appraiser, based on the problem to be solved
The Scope of Work Rule places the responsibility for determining scope of work on the appraiser, not the client.
Question 5: The 'intended use' of an appraisal under USPAP is best described as:
- The method the appraiser uses to develop the value opinion
- The purpose for which the client will use the appraisal results (Correct answer)
- The type of property being appraised
- The date through which the appraisal is effective
Correct answer: The purpose for which the client will use the appraisal results
Intended use refers to the purpose for which the appraisal report will be used by the client and intended users.
Question 6: When a residential appraiser makes adjustments in the sales comparison approach, USPAP requires that adjustments be:
- Expressed only as dollar amounts, not percentages
- Applied in a sequential, line-by-line format
- Supported by market data and reflect market participants' reactions (Correct answer)
- Limited to no more than 25% net adjustment per comparable
Correct answer: Supported by market data and reflect market participants' reactions
USPAP requires that adjustments reflect how market participants react to differences between properties, supported by market evidence.
Question 7: An appraiser completes a residential appraisal and later discovers a significant error in the report. Under USPAP, the appraiser should:
- Notify the client immediately and correct the error through an amended or corrected report (Correct answer)
- Destroy the original report and issue a new one with a different date
- Wait for the client to discover the error before taking action
- Issue a disclaimer noting that errors may exist in any appraisal
Correct answer: Notify the client immediately and correct the error through an amended or corrected report
USPAP's Ethics Rule requires the appraiser to notify the client of any error and correct it through a corrected or amended report.
USPAP USPAP Residential Appraiser 4
Under USPAP, 'market value' as used in most residential appraisals assumes all of the following EXCEPT: