Appraisal Reviewer Property Valuations Flashcards
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Read the first 7 Appraisal Reviewer Property Valuations flashcards as text
When reviewing a residential appraisal, a reviewer notices the appraiser used three comparables all located in a subdivision that is considerably newer and superior to the subject's neighborhood. This raises concerns about:
Answer: Whether the comparables represent the same competitive market as the subject
Comparables should compete with the subject in the same or similar market; using comparables from a clearly superior neighborhood can result in upward-biased adjustments and an unreliable value conclusion.
An appraiser's sales comparison approach grid shows net adjustments of -38% and gross adjustments of 62% on one comparable. Under Fannie Mae guidelines, this comparable is:
Answer: Potentially outside acceptable thresholds, warranting explanation or replacement
Fannie Mae guidelines flag comparables with net adjustments exceeding ±15% of sale price or gross adjustments exceeding 25%, and such comparables require explanation or should be replaced.
Which appraisal approach is typically given the most weight when valuing a special-purpose property such as a church or school?
Answer: Cost approach
Special-purpose properties rarely sell and generate little market-rent data, so the cost approach is typically most reliable and given the most weight.
In reviewing a complex commercial appraisal, the reviewer disagrees with the appraiser's value conclusion. Under USPAP Standard 3, the reviewer may:
Answer: Issue a review report that includes the reviewer's own value opinion if necessary
USPAP Standard 3 permits (and sometimes requires) the reviewer to provide their own value opinion in the review report when disagreeing with the appraiser's conclusion.
An appraiser values a 10-unit apartment building using a gross rent multiplier (GRM) of 12, derived from three comparable sales. A reviewer's concern about this approach is that the GRM:
Answer: Does not account for differences in operating expenses between properties
GRM is a crude measure because it ignores vacancy, operating expenses, and expense ratios, which can vary widely among comparable properties.
When an appraisal review reveals that the appraiser failed to identify a significant easement affecting the subject property, this omission most likely constitutes:
Answer: A misleading appraisal under USPAP if the easement affects value
Failing to identify and analyze a value-affecting easement can render an appraisal misleading, violating USPAP's requirement that appraisals not mislead intended users.
A reviewer is asked to review an 'as-improved' appraisal of a proposed new apartment complex. Which of the following is a critical assumption the reviewer must verify is properly disclosed?
Answer: The extraordinary assumption that the improvements will be completed as proposed
An 'as-improved' appraisal of a proposed property requires an extraordinary assumption that construction will be completed as described, and this must be clearly disclosed per USPAP.