USPAP 2024 Ch 7: Standard 1

STANDARD 1 of USPAP addresses:

Requirements that are specific to the development of real property appraisal assignments

True or False. The requirements of STANDARD 1 can be used as a checklist by an appraiser who is developing a real property appraisal.

True

Which statement is FALSE regarding STANDARD 1?

It contains six Standards Rules.

It can be used as a checklist for proper development.

It mirrors the appraisal process.

It covers real and personal property appraisal development.

It covers real and personal property appraisal development.

(It does not cover personal property appraisal)

An appraiser's client wishes to remain anonymous, and asks the appraiser not to include client's identity in an appraisal report. What should the appraiser do?

Insist on including the client's identity in the report against the client's wishes

Omit the client's identity from the report but document the client's identity in the workfile

Identify the client by an alias in the report

Withdraw from the assignment

Omit the client's identity from the report but document the client's identity in the workfile

If a mortgage borrower receives a copy of an appraisal report from a mortgage lender as a result of disclosure requirements:

This is an illegal act by the lender, who is subject to prosecution

This does not make the borrower an intended user

The appraiser can void the appraisal at his/her discretion

The borrower is now considered an intended user under USPAP

This does not make the borrower an intended user

(they need to have been identified as an intended user at the time of the assignment)

When does a series of minor errors potentially result in a USPAP violation?

When the series of errors affects the credibility of the results

When the client has to request corrections from the appraiser after the report has been completed

When the errors were made by a trainee assisting the appraiser

When there are more than 3 such errors in the report

When the series of errors affects the credibility of the results

Which statement is TRUE regarding exposure time?

It is always assumed to begin on the effective date of the appraisal and extend out into the future.

It is necessary in all appraisal assignments.

It is always assumed to precede the effective date of the appraisal.

It is always assumed to precede the effective date of the appraisal.

(It is only necessary when exposure time is a component of the definition of value being used)

Exposure time is:

Not required to be reported

Unnecessary in most appraisal assignments

An opinion developed by an appraiser

A fact to be found

An opinion developed by an appraiser

An example of a relevant property characteristic that could affect a real property appraisal assignment would be:

The type of report requested by the client

The fact that the subject property is affected by an easement

The amount of time that is given for the appraiser to complete the assignment

The fact that the subject property is affected by an easement

What is the primary purpose of an appraiser making an inspection of the subject property?

To meet the USPAP requirement that all subject properties be inspected

To prove to the client that the appraiser knows the property

All of the answers listed

To collect information about characteristics that are relevant to value

To collect information about characteristics that are relevant to value

(USPAP does not require that the subject property be inspected)

An extraordinary assumption may be used in an assignment only if:

Mandated by law or regulation

Approved by the client

Accompanied by a limiting condition

Required to develop credible results

Required to develop credible results

When an appraiser provides a current value opinion on a proposed new building, he or she is utilizing a(an) _____________ that the proposed improvements are completed as of the effective date of the appraisal.

Hypothetical condition

Limiting condition

Unethical contingency

Extraordinary assumption

Hypothetical condition

An unacceptable assignment condition would be a condition that:

All of the answers listed

Precludes an appraiser's impartiality

Limits the scope of work to the extent that the value opinion is not credible

Limits report content, resulting in a misleading report

All of the answers listed

I was recently asked to perform a real estate appraisal assignment, but the individual who contacted my firm was not the client and indicated that the client could not be identified. Can I agree to perform this assignment and comply with USPAP?

No

In all assignments, the appraiser must know the identity of the client in order to proceed; however, the appraiser is not required to disclose the identity of the client in the appraisal report.

Which statement is TRUE regarding USPAP and the three approaches to value?

USPAP requires that at least two of the three approaches be developed in every appraisal assignment.

USPAP requires specific methodology for developing the cost and income approaches, but not the sales comparison approach.

An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.

An appraiser must develop all three approaches to value in every appraisal assignment.

An assignment condition may require an appraiser to develop an approach that he or she would otherwise consider unnecessary.

When developing a sales comparison approach under USPAP:

The appraiser must analyze such data as are available to indicate a value conclusion

The appraiser must consider at least three comparable sales

Guidelines for time and distance specified by SR 1-4 must be followed

The appraiser must analyze such data as are available to indicate a value conclusion

When developing an appraisal on real property under STANDARD 1, an appraiser must research and analyze sales of the subject property that occurred within the prior _______ of the effective date.

3 years

When analyzing listings of the subject property in a real property appraisal assignment, USPAP requires an appraiser to analyze, at a minimum, ____________.

Current listings

All listings that occurred within the last year

All listings that occurred within the last three years

Current listings

Analyzing prior listings may be an assignment condition specified by certain clients, but it is not specifically required by USPAP.

I am currently appraising an office building that was transferred 18 months ago by a deed in lieu of foreclosure. Am I required to analyze this transaction?

Yes

All sales of the appraised property within the three-year time period must be analyzed; this includes transfers in lieu of foreclosure and foreclosure sales.

Does Standards Rule 1-5 require an appraiser to analyze the sales history for the comparable sales?

No

Analysis of the sales history of the comparable properties may be an assignment condition required by certain clients or client groups, but it is not a USPAP requirement.

I know that USPAP requires an appraiser to develop a reconciliation of the approaches to value that are used in an assignment. Does USPAP require the appraiser to reconcile the data used in each approach to value?

Yes. This is required by USPAP Standards Rule 1-6.

When is it necessary to analyze prior listings of the subject property in a real property appraisal assignment?

Only in the appraisal of non-residential real property

When such analysis is relevant to the current assignment

In all appraisal assignments, regardless of property type

Only in real property appraisal assignments

When such analysis is relevant to the current assignment

n the development of an appraisal, the appraiser is required to:

Inspect the comparable sales by at least driving by them

Not commit a substantial error that significantly affects the appraisal

Use all three approaches to value

Make a personal inspection of the subject property

Not commit a substantial error that significantly affects the appraisal

True or False. Except when specifically requested by the client not to do so, an appraiser must state the identity of the client in the report.

True