USPAP 15 Hour Course Questions &
Answers(RATED A+)
Should an appraiser change his opinion of value if it is less than a 1% difference in
value if promised more work would come his way if he did? - ANSWER No, an
appraiser must be able to perform assignments without accommodation of personal
interests and without advocating the cause or interest of any party.
If a client wants to know the current value as though repaired on a house that had
severe flooding, what type of assignment condition should the appraiser use? -
ANSWER Hypothetical Condition: the property as if repaired does not currently exist
A client has repaired a property that was damaged due to flooding. Many neighboring
properties in the same situation soon developed mold problems. The client currently
shows no evidence of mold, what type of assignment condition should you use if the
client wants a current value opinion? - ANSWER Extraordinary assumption: as of the
date of value, the fact of the potential condition (i.e. mold) is unknown, and it is
reasonable to believe the current condition is true.
An appraiser performed the cost approach in an appraisal of a new warehouse. The
buyer paid 1.9 million, the appraised value was 2 million. Identify each of the three
components: the reproduction cost developed by the appraiser, the 1.9 million, and the
2 million. (Fact, estimate of fact, and opinion) - ANSWER The reproduction cost
developed by the appraiser is an estimate of fact.
The 1.9 million is the price as a stated fact.
The 2 million value is the appraiser opinion.
I accept assignments from an Appraisal Management Company that has informed me
they are an authorized agent for the lenders they represent.. As the AMC is not my
client, they have requested that I only identify the lender they are representing as the
client. USPAP says the appraisers client is the party who engages the appraiser. Is it
ethical to omit the AMC's name as the client on my reports? - ANSWER Yes, if the AMC
is acting as an agent for a lender, identifying only the lender as your client is acceptable.
However, the appraiser must be aware of situations where disclosure of the AMC might
be required by law, regulation, or the secondary market.
A client requests "a number" over the phone in advance of the written appraisal report.
How should an appraiser handle this type of request? - ANSWER This is an additional
report - an oral report. A summary of the oral report and a signed and dated certification
must be included in the workfile. Additionally, the workfile must contain a true copy of
the written report that is delivered to the client.
A client contacts a broker to leaser her office property. The broker also provides
appraisal services, but the client was not aware of that when she contracted with the
, broker. Is this assignment a valuation service or is it an appraisal service? - ANSWER
This is a valuation service, but because the client does not have expectations that the
broker will act in the role of an appraiser it is not appraisal practice. It is incumbent,
however, on the individual no to misrepresent his/her role in the assignment.
I know appraisers who consistently conclude that the market value of any property they
appraise is equal to the contract sales price. In doing so, they facilitate sales and
financing of purchases, which is apparently what keeps their clients happy. Is this a
violation of USPAP? - ANSWER A contract price can be a good indicator of a property's
market value, and it may be logical and reasonable for the appraiser to conclude that
they are the same. However, this is not always the case. A contract sales price, while a
significant piece of market data, must not become a target in an appraisal assignment.
Competent analysis of relevant and credible market data must be the appraiser basis
for a market value conclusion.
If I have appraised a property multiple times within the previous three years, do I have
to disclose the number of appraisal services? ("I have appraised this property three
times in three years?") - ANSWER Yes, each prior service must be disclosed to the
client and included in the report certification.
I occasionally receive requests to appraise a property that I have appraised in the past.
Since the ETHICS RULE requires me to disclose any assignments that I performed
within the past three years prior to the date of acceptance of the assignment, isn't such
a disclosure a violation of an appraisers responsibility under the Confidentiality section
of the ETHICS RULE? - ANSWER Generally no, the Confidentiality section of the
ETHICS RULE prohibits, with some exceptions, the disclosure of "confidential
information or assignment results prepared for a client." The mere fact that an appraiser
appraised a property is not confidential information as defined in USPAP. However, the
appraiser must be careful not to disclose confidential information from a previous
assignment in the new assignment.
Is it ethical to reduce the fee for appraisals in cases when the loan did not close if the
client agreed to pay extra for other assignments? - ANSWER No, the fact that the fee
could be made up in other fees does not change this interpretation.
A potential client has asked me to complete a form indicating what my appraisal fee
would be for different assignments. The form asks me to indicate my appraisal fees
according to appraised value by listing the fee for assignments with appraised values
between $100,000 and $299,000, $300,000 and $499,000 and so on. Is it a violation of
USPAP to quote fees in the manner? - ANSWER Yes, this is a violation of USPAP.
Completing and submitting such a form to a potential client establishes a compensation
arrangement for assignments that is contingent on the amount of the value opinion. This
is prohibited by the Management section of the ETHICS Rule, specifically the 3rd
paragraph.
Answers(RATED A+)
Should an appraiser change his opinion of value if it is less than a 1% difference in
value if promised more work would come his way if he did? - ANSWER No, an
appraiser must be able to perform assignments without accommodation of personal
interests and without advocating the cause or interest of any party.
If a client wants to know the current value as though repaired on a house that had
severe flooding, what type of assignment condition should the appraiser use? -
ANSWER Hypothetical Condition: the property as if repaired does not currently exist
A client has repaired a property that was damaged due to flooding. Many neighboring
properties in the same situation soon developed mold problems. The client currently
shows no evidence of mold, what type of assignment condition should you use if the
client wants a current value opinion? - ANSWER Extraordinary assumption: as of the
date of value, the fact of the potential condition (i.e. mold) is unknown, and it is
reasonable to believe the current condition is true.
An appraiser performed the cost approach in an appraisal of a new warehouse. The
buyer paid 1.9 million, the appraised value was 2 million. Identify each of the three
components: the reproduction cost developed by the appraiser, the 1.9 million, and the
2 million. (Fact, estimate of fact, and opinion) - ANSWER The reproduction cost
developed by the appraiser is an estimate of fact.
The 1.9 million is the price as a stated fact.
The 2 million value is the appraiser opinion.
I accept assignments from an Appraisal Management Company that has informed me
they are an authorized agent for the lenders they represent.. As the AMC is not my
client, they have requested that I only identify the lender they are representing as the
client. USPAP says the appraisers client is the party who engages the appraiser. Is it
ethical to omit the AMC's name as the client on my reports? - ANSWER Yes, if the AMC
is acting as an agent for a lender, identifying only the lender as your client is acceptable.
However, the appraiser must be aware of situations where disclosure of the AMC might
be required by law, regulation, or the secondary market.
A client requests "a number" over the phone in advance of the written appraisal report.
How should an appraiser handle this type of request? - ANSWER This is an additional
report - an oral report. A summary of the oral report and a signed and dated certification
must be included in the workfile. Additionally, the workfile must contain a true copy of
the written report that is delivered to the client.
A client contacts a broker to leaser her office property. The broker also provides
appraisal services, but the client was not aware of that when she contracted with the
, broker. Is this assignment a valuation service or is it an appraisal service? - ANSWER
This is a valuation service, but because the client does not have expectations that the
broker will act in the role of an appraiser it is not appraisal practice. It is incumbent,
however, on the individual no to misrepresent his/her role in the assignment.
I know appraisers who consistently conclude that the market value of any property they
appraise is equal to the contract sales price. In doing so, they facilitate sales and
financing of purchases, which is apparently what keeps their clients happy. Is this a
violation of USPAP? - ANSWER A contract price can be a good indicator of a property's
market value, and it may be logical and reasonable for the appraiser to conclude that
they are the same. However, this is not always the case. A contract sales price, while a
significant piece of market data, must not become a target in an appraisal assignment.
Competent analysis of relevant and credible market data must be the appraiser basis
for a market value conclusion.
If I have appraised a property multiple times within the previous three years, do I have
to disclose the number of appraisal services? ("I have appraised this property three
times in three years?") - ANSWER Yes, each prior service must be disclosed to the
client and included in the report certification.
I occasionally receive requests to appraise a property that I have appraised in the past.
Since the ETHICS RULE requires me to disclose any assignments that I performed
within the past three years prior to the date of acceptance of the assignment, isn't such
a disclosure a violation of an appraisers responsibility under the Confidentiality section
of the ETHICS RULE? - ANSWER Generally no, the Confidentiality section of the
ETHICS RULE prohibits, with some exceptions, the disclosure of "confidential
information or assignment results prepared for a client." The mere fact that an appraiser
appraised a property is not confidential information as defined in USPAP. However, the
appraiser must be careful not to disclose confidential information from a previous
assignment in the new assignment.
Is it ethical to reduce the fee for appraisals in cases when the loan did not close if the
client agreed to pay extra for other assignments? - ANSWER No, the fact that the fee
could be made up in other fees does not change this interpretation.
A potential client has asked me to complete a form indicating what my appraisal fee
would be for different assignments. The form asks me to indicate my appraisal fees
according to appraised value by listing the fee for assignments with appraised values
between $100,000 and $299,000, $300,000 and $499,000 and so on. Is it a violation of
USPAP to quote fees in the manner? - ANSWER Yes, this is a violation of USPAP.
Completing and submitting such a form to a potential client establishes a compensation
arrangement for assignments that is contingent on the amount of the value opinion. This
is prohibited by the Management section of the ETHICS Rule, specifically the 3rd
paragraph.
