Basic Appraisal Procedures, Basic Appraisal Procedures Exam Questions and Answers 2024

Basic Appraisal Procedures, Basic Appraisal Procedures Exam Questions and Answers 2024 8 Steps in the Valuation Process -Answer-1) Define the problem 2) Determine scope of work 3) Gather, record and verify the data 4) Determine the highest and best use 5) Estimate the land value 6) Estimate value by each of the 3 approaches (if applicable) 7) Reconcile the estimated values into the final opinion of value 8) Report the final opinion of value Defining the Problem: 6 Sub-steps within -Answer--Identification and location of the real estate -Identification of the property rights -Definition of value -Purpose and intended use of the appraisal -Effective date of the opinion of value -Any special limiting conditions Real Property -Answer-*the interests, benefits and rights inherent in the ownership of real estate -partial estates: life estate, easement & encroachment -specialized form of ownership: condo, coop, PUD, & timeshare Effective Date of the Value Opinion -Answer--two dates are essential to an appraisal report -the effective date of value can be a past (retrospective), current or future (prospective) date, in many cases it's the date the appraiser inspects the property; the decision will be made in concert with the client's needs -the date of the report is the date you sign and issue the final report Any Special Limiting Conditions -Answer--two common types are: extraordinary assumption & hypothetical condition Extraordinary Assumption -Answer-*an assumption, directly related to a specific assignment, as of the effective date of the assignment results, which if found to be false, could alter the appraiser's opinions or conclusions -it presumes as fact otherwise uncertain information about physical, legal or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis Hypothetical Condition -Answer-*a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis -it is contrary to known facts about physical, legal or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis -this type of appraisal could be significantly misleading to intended users if the use of the hypothetical condition were not properly disclosed Scope of Work -Answer-*the type and extent of research and analyses in an assignment -understanding which analyses, methods and techniques are necessary and what data are necessary to correctly complete the analyses is an integral part of the scope-of-work decision -the Scope of Work Rule was added to the 2006 edition of USPAP -applies to appraisal reviews assignments as well as appraisals -scope of work includes: -the extent to which the property is identified -the extent to which tangible property is inspected -the type and extent of data researched -the type and extent of analyses applied to arrive at opinions or conclusions -solely the responsibility of the appraiser; ensures credible assignment results, consistent with the expectations of intended users & is consistent with what the appraiser's peers' actions would be in a similar assignment -in a Restricted Appraisal Report the scope of work need only be stated Gather, Record & Verify the data -Answer--need to record the data in a workfile -the workfile must exist prior to issuance of the report -must keep 5 years after preparation or 2 years after deposition, whichever period expires last -workfile includes: -name of client & any other intended users