Appraisal Reviewer Property Valuations Flashcards

In reviewing a manufactured home appraisal, the reviewer notices the appraiser used site-built comparables without explanation. This is problematic primarily because:

Answer: Market participants typically view manufactured and site-built homes as distinct product types, and mixing them without adjustment or explanation undermines credibility

Manufactured and site-built homes appeal to different market segments and may command different prices, so using site-built comparables without addressing the difference and making appropriate adjustments weakens the appraisal.

A reviewer is evaluating whether an appraiser appropriately identified a property's extraordinary assumption. Which scenario requires an extraordinary assumption?

Answer: The value is based on a proposed renovation that has not yet been completed

An extraordinary assumption must be identified when the value opinion is based on information that, if incorrect, would materially affect the conclusion—such as a renovation not yet complete.

A reviewer determines that an appraiser made a $30,000 downward adjustment for 'inferior location' on all three comparables without market data support. The most appropriate reviewer action is to:

Answer: Note the lack of market support as a deficiency and request documentation or revision

Adjustments must be market-supported; noting the deficiency and requesting supporting evidence is the proper first step before escalating further.

Under the Uniform Standards of Professional Appraisal Practice, which of the following is NOT a permissible scope of work in a review assignment?

Answer: Altering the original appraiser's workfile to correct errors on behalf of the client

A reviewer must never alter the original appraiser's workfile; doing so would compromise the integrity of the appraisal record and could constitute fraud.

An appraiser's cost approach for a 25-year-old office building shows 0% physical depreciation. A reviewer should question this because:

Answer: All buildings experience some physical depreciation over time, and 0% is rarely supportable for a 25-year-old structure

Physical depreciation accrues from wear and tear over time, and a 25-year-old building with zero depreciation would require exceptional justification that the structure is in like-new condition.

Which situation would most clearly represent a violation of an appraiser's independence, potentially invalidating the review?

Answer: The reviewer's compensation is contingent on the reviewed value meeting a specific loan threshold

Contingent compensation tied to a specific value outcome constitutes a prohibited conflict of interest under USPAP and compromises appraiser independence.

When reviewing an appraisal for an FHA-insured loan, which additional compliance requirement must the reviewer consider beyond USPAP?

Answer: FHA Handbook requirements, including Minimum Property Standards and the use of FHA-approved appraisers

FHA appraisals must comply with HUD/FHA Handbook 4000.1, including Minimum Property Standards and appraisal roster requirements, in addition to USPAP.