SAEE SAEE - Valuation Reporting Requirements Questions and Answers 4 — Questions and Answers
Question 1: When preparing a summary appraisal report (now called an Appraisal Report under current USPAP), the appraiser is required to:
- Include a complete detailed explanation of every step in the valuation process
- Summarize or state the required elements in the report (Correct answer)
- Only reference supporting data from the workfile
- Exclude any assumptions or limiting conditions
Correct answer: Summarize or state the required elements in the report
An Appraisal Report requires that required elements be summarized or stated within the report, providing enough information for the intended users to understand the appraisal.
Question 2: Which of the following must be included in a real property appraisal report according to USPAP Standards Rule 2-2?
- A listing of all properties ever appraised by the appraiser
- The identity of the client and any other intended users (Correct answer)
- The appraiser's personal financial statements
- Photographs of every comparable sale property
Correct answer: The identity of the client and any other intended users
Standards Rule 2-2 requires the report to identify the client and any other intended users by name or type.
Question 3: In a valuation report, the statement of the effective date of the appraisal is important because:
- It determines the appraiser's license renewal requirements
- The opinion of value reflects market conditions as of that specific date (Correct answer)
- It sets the deadline for the client to pay the appraiser
- It controls which comparable sales must be included in the report
Correct answer: The opinion of value reflects market conditions as of that specific date
The effective date anchors the value opinion to a specific point in time, as market conditions change and value is time-specific.
Question 4: An appraiser completes a real property appraisal and adds a co-signer who did not inspect the property. The report must:
- State that the co-signer is responsible for the entire report
- Identify the co-signer's role and note the inspection limitation in the certification (Correct answer)
- Prohibit the co-signer from certifying the report entirely
- Convert to a Restricted Appraisal Report due to the limitation
Correct answer: Identify the co-signer's role and note the inspection limitation in the certification
USPAP requires that co-signers who did not inspect the property identify their role and disclose the nature and extent of their contribution in the certification.
Question 5: Which of the following correctly describes a 'general assumption' in a valuation report?
- A condition known to be false that the appraiser treats as true
- A routine assumption common to appraisal practice that may not require explicit disclosure (Correct answer)
- An unverifiable condition specific to the subject property
- An assumption imposed by the client that limits the analysis
Correct answer: A routine assumption common to appraisal practice that may not require explicit disclosure
General assumptions are standard appraisal conventions (e.g., assuming good title) that are widely accepted in practice and typically listed as standard limiting conditions.
Question 6: USPAP requires that appraisal reports state the real property interest appraised. This is important because:
- Different interests (fee simple, leasehold, etc.) can result in different values (Correct answer)
- Lenders require a specific interest type for all mortgage appraisals
- The interest determines which cost approach method to use
- Only fee simple interests require disclosure of the interest appraised
Correct answer: Different interests (fee simple, leasehold, etc.) can result in different values
The property interest being valued (fee simple, leased fee, leasehold, etc.) directly affects the value conclusion since different interests carry different rights and limitations.
Question 7: When a valuation report for a federally related transaction omits the sales comparison approach, the report must:
- Automatically be rejected by the lender
- Explain why the approach was excluded (Correct answer)
- Include an additional cost approach to compensate
- Be co-signed by a second state-certified appraiser
Correct answer: Explain why the approach was excluded
USPAP and FIRREA-compliant reporting require that when any standard approach is not used, the report must explain the reason for its exclusion.
SAEE SAEE - Valuation Reporting Requirements Questions and Answers 4
When preparing a summary appraisal report (now called an Appraisal Report under current USPAP), the appraiser is required to: