Basic Appraisal Procedures Questions and Answers

Basic Appraisal Procedures Questions and Answers True or False: The effective date of the valuation must be the date on which the appraiser inspected the subject property. -Answer-FALSE In many cases, the effective date is the date the appraiser inspects the subject property. But that is not always the case. The effective date can be any date, whether past, present, or future. "An interest or interests in real estate" is the definition of -Answer-Real Property "An assignment-specific assumption, as of the effective date, which, if found to be false, could alter the appraiser's opinions or conclusions" is the definition of -Answer- Extraordinary assumption Extraordinary assumption is defined as "an assignment-specific assumption, as of the effective date, which, if found to be false, could alter the appraiser's opinions or conclusions." The steps in the valuation process (sometimes also called the appraisal process) are: - Answer-Define the problem Determine scope of work Gather, record, and verify the data Determine the highest and best use Estimate the land value Estimate value by each of the three approaches (if applicable) Reconcile the estimated values into the final opinion of value Report the final opinion of value The highest and best use of a property must be: -Answer-Legally permissible Physically possible Financially feasible Maximally productive The valuation process is a systematic procedure employed to provide the answer to a(n) ________ question about the value of __________. -Answer-client's, real property Define the Problem. The valuation process is a step by step procedure that can be applied to any type of appraisal assignment. We need to answer the client's questions and problem. Each appraisal report must contain two dates, the ____________ and the ______________. -Answer-effective date of the appraisal, date of the report Date of Value and Date of Report. Both dates are necessary. Providing both of these dates establishes the perspective from which the appraiser is examining the market. An appraiser observes that an underground tank is leaking. An appraisal could be done of the property in its "as is" contaminated condition or could be appraised under the _______________ that the property is free of contamination. -Answer-hypothetical condition Hypothetical Condition. That is a good illustration of how a hypothetical condition can be employed. An appraiser encounters a small crack in a foundation slab on a house he is appraising. He discloses the crack in the appraisal report and states that he is not a structural engineer and assumes the crack is not structural in nature and does not require a repair. This is an example of the use of a(n) ______________. -Answer-Extraordinary assumption Extraordinary Assumption. That is a good example of an extraordinary assumption. There is no known problem, but the appraiser is protecting him or her self in case there really is a problem. Which appraisal term is defined as: "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"? -Answer- Hypothetical condition Hypothetical Condition. That defines a hypothetical condition - something we know is not true but is assumed for purposes of analysis. According to USPAP, the credibility of assignment results is measured ______________. -Answer-within the context of intended use SCOPE OF WORK RULE. Each assignment is different. The scope of work must be customized to work with the intended use. "Documentation necessary to support an appraiser's analyses, opinions, and conclusions" is the definition of -Answer-workfile Gather, Record, and Verify the Data. That defines the workfile for any assignment. Where would an appraiser keep the documentation that supports her appraised value? - Answer-workfile "The type and extent of research and analyses in an appraisal or appraisal review assignment" is the definition of -Answer-scope of wor