Advanced Techniques & Methods Flashcards
7 cards from real CAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Advanced Techniques & Methods flashcards as text
A reviewer is examining a sales comparison approach where the appraiser used only two comparable sales. The most critical deficiency is:
Answer: Two sales provide insufficient data to bracket key characteristics of the subject
While USPAP has no specific minimum, two comparable sales rarely provide enough data to bracket the subject's key attributes and support a credible conclusion.
In reviewing a subdivision development analysis, the reviewer should verify that the appraiser's absorption rate is derived from:
Answer: Active listing inventory divided by monthly sales in the subject's competitive market
Market-derived absorption rate is calculated from competitive market inventory and actual sales velocity, not from developer projections or broad regional averages.
A reviewer notices an appraiser used effective gross income multipliers (EGIM) instead of overall capitalization rates to value an income-producing property. When is this technique most defensible?
Answer: When sufficient sales of similar income properties with known EGI are available
The EGIM technique is most reliable when the market provides a sufficient sample of income property sales with verifiable effective gross income for meaningful multiplier extraction.
When reviewing an appraisal of a property with significant environmental contamination, the reviewer must ensure the appraiser addressed which concept?
Answer: Stigma, representing residual value loss beyond remediation costs
Even after remediation, contaminated properties may suffer a stigma discount from market perception, which must be addressed separately from direct cleanup costs.
A reviewer evaluates an appraisal using the sales comparison approach where the appraiser made a location adjustment but failed to document a paired sales analysis. The reviewer should:
Answer: Require the appraiser to support the adjustment magnitude with market evidence
Every adjustment must be supported by market evidence; while paired sales are the preferred method, the reviewer must ensure some form of credible support is provided for the adjustment amount.
In reviewing an appraisal using the yield capitalization technique, the reviewer confirms the appraiser used a pre-tax discount rate applied to after-tax cash flows. This error would result in:
Answer: An understated value because after-tax cash flows are lower than pre-tax
Applying a pre-tax (higher) discount rate to after-tax (lower) cash flows double-penalizes the income stream, producing an understated value conclusion.
A reviewer finds that an appraiser allocated 100% weight to the sales comparison approach and 0% to the income approach for a duplex in a strong rental market. The most appropriate reviewer response is to:
Answer: Flag the reconciliation as potentially deficient given the property's income-producing characteristics
A duplex in a strong rental market attracts investor buyers who rely on income metrics, so excluding the income approach from reconciliation may not reflect the market's behavior.