CAR Communication & Documentation 2 — Questions and Answers
Question 1: When a review appraiser identifies a significant error in a completed appraisal report, what is the most appropriate initial action?
- Immediately notify the lender without contacting the original appraiser
- Document the error and communicate findings to the client per engagement terms (Correct answer)
- Discard the report and order a new appraisal without explanation
- Correct the error directly in the original report
Correct answer: Document the error and communicate findings to the client per engagement terms
The review appraiser should document identified errors and communicate findings to the client according to the terms of the review engagement.
Question 2: Which of the following best describes the purpose of the 'scope of work' section in an appraisal review report?
- To list the reviewer's qualifications and certifications
- To identify what the reviewer did and did not do during the review process (Correct answer)
- To summarize the original appraiser's methodology
- To provide the final value conclusion of the reviewed property
Correct answer: To identify what the reviewer did and did not do during the review process
The scope of work section describes the extent of the review process, including what research and analyses were and were not performed.
Question 3: Under USPAP, a review appraiser who develops their own value opinion in a desk review must:
- Disclose this opinion only if it differs materially from the original appraisal
- Always present it as a range rather than a point estimate
- Comply with the relevant USPAP Standards for appraisal development and reporting (Correct answer)
- Keep it confidential unless litigation is anticipated
Correct answer: Comply with the relevant USPAP Standards for appraisal development and reporting
When a reviewer develops their own value opinion, they must comply with applicable USPAP appraisal development and reporting standards.
Question 4: A field review differs from a desk review primarily in that it:
- Requires a new appraisal license in the subject property's jurisdiction
- Includes an exterior or interior inspection of the subject property (Correct answer)
- Mandates the use of a different reporting form
- Must be completed within 48 hours of the original appraisal
Correct answer: Includes an exterior or interior inspection of the subject property
A field review includes an on-site inspection (exterior and/or interior) of the subject property, unlike a desk review which is conducted without physical inspection.
Question 5: When documenting comparable sales analysis in a review, the reviewer should:
- Accept the original appraiser's comparables without independent verification
- Note whether the selected comparables are reasonable given market conditions (Correct answer)
- Always substitute their own comparables regardless of the originals' quality
- Limit documentation to properties within a one-mile radius
Correct answer: Note whether the selected comparables are reasonable given market conditions
The reviewer should assess and document whether the original appraiser's comparable selection is reasonable and supported by market evidence.
Question 6: Which statement about confidentiality in appraisal review is most accurate?
- Review reports may be freely shared with any interested party once completed
- Reviewers must maintain client confidentiality and protect assignment-specific information (Correct answer)
- Confidentiality rules apply only to the original appraisal, not the review
- State certification boards are exempt from confidentiality restrictions
Correct answer: Reviewers must maintain client confidentiality and protect assignment-specific information
Review appraisers must protect confidential information and follow USPAP's Confidentiality section, which applies to both appraisal and review assignments.
Question 7: In a review report, the 'extraordinary assumption' must be:
- Disclosed only in the addendum and not the certification
- Clearly stated, with its potential impact on the review conclusion noted (Correct answer)
- Limited to assumptions about physical property characteristics only
- Omitted if the reviewer considers it unlikely to affect the outcome
Correct answer: Clearly stated, with its potential impact on the review conclusion noted
Extraordinary assumptions must be clearly disclosed and the reviewer must indicate their potential impact on the review conclusion.
CAR Communication & Documentation 2
When a review appraiser identifies a significant error in a completed appraisal report, what is the most appropriate initial action?