SAEE SAEE - Valuation Reporting Requirements Questions and Answers 3 — Questions and Answers
Question 1: Under USPAP, which element is REQUIRED to be included in the certification of a real property appraisal report?
- A statement that the appraiser has no prior relationship with the property
- A statement that the appraiser's compensation is not contingent on a predetermined value (Correct answer)
- A statement listing every comparable sale used in the analysis
- A statement confirming the appraiser holds a state-certified license
Correct answer: A statement that the appraiser's compensation is not contingent on a predetermined value
USPAP Standards Rule 2-3 requires the certification to state that compensation is not contingent on a predetermined value or direction in value.
Question 2: When a valuation report contains an extraordinary assumption, the appraiser must:
- Omit the assumption if it cannot be verified
- Clearly state the assumption and note it could affect the assignment results (Correct answer)
- Obtain written client approval before including the assumption
- Automatically issue a restricted appraisal report instead
Correct answer: Clearly state the assumption and note it could affect the assignment results
USPAP requires that extraordinary assumptions be clearly stated and that the report indicate they could affect assignment results.
Question 3: The Scope of Work in a valuation report must describe:
- Only the physical inspection procedures performed
- The extent of research and analyses applied in the assignment (Correct answer)
- All comparable sales data collected regardless of relevance
- The appraiser's professional development history
Correct answer: The extent of research and analyses applied in the assignment
USPAP's Scope of Work Rule requires disclosure of the extent of research (data collected, sources consulted) and analyses applied.
Question 4: A Restricted Appraisal Report differs from an Appraisal Report primarily in that it:
- Uses different valuation methods than a standard report
- Contains less content but may reference the workfile for detail (Correct answer)
- Is only permitted for commercial property assignments
- Requires a higher level of USPAP compliance
Correct answer: Contains less content but may reference the workfile for detail
A Restricted Appraisal Report contains fewer content requirements and relies on the workfile for supporting details, with use restricted to the client only.
Question 5: Under USPAP, which of the following is an acceptable basis for departing from a SPECIFIC REQUIREMENT of a standard?
- The client requests a shorter report to reduce costs
- The scope of work makes the requirement unnecessary for credible results (Correct answer)
- The state AMC waives the requirement in writing
- The property is a non-complex single-family residential dwelling
Correct answer: The scope of work makes the requirement unnecessary for credible results
Under USPAP, departures from specific requirements are permitted only when the scope of work makes compliance unnecessary for credible results.
Question 6: When an appraiser uses an automated valuation model (AVM) output as a tool in developing an opinion of value, the report must:
- Reproduce the AVM algorithm in full
- Disclose the use of the AVM as part of the scope of work (Correct answer)
- Identify the AVM as a comparable sale
- Assign the AVM a separate line of value reconciliation
Correct answer: Disclose the use of the AVM as part of the scope of work
Use of any tool — including an AVM — must be disclosed as part of the scope of work describing the research and analyses performed.
Question 7: If an appraiser's opinion of value is subject to a hypothetical condition, the report must:
- State the condition is assumed to be true even though it may be false (Correct answer)
- Verify the condition independently before including it
- Only disclose the condition in the workfile, not the report
- Convert the report to a Restricted Appraisal Report automatically
Correct answer: State the condition is assumed to be true even though it may be false
A hypothetical condition is something assumed to be true even though it is known to be false, and USPAP requires it to be clearly stated as such in the report.
SAEE SAEE - Valuation Reporting Requirements Questions and Answers 3
Under USPAP, which element is REQUIRED to be included in the certification of a real property appraisal report?