Exam 1

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Exam 1
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  1. A local builder hires you to provide a market value appraisal in order to secure financing for a construction loan. He provides you with the necessary plans and specifications for the proposed construction. The site is currently zoned R-1 single-family residential and is quite confident that his application will be approved. The change will permit up to two residential units to be built on one lot. you treat the zoning as R-2 for the purpose of your analysis. In order to conform to USPAP, you must use a(n)
    A. extraordinary assumption
    B. hypothetical condition
    C. zoning variance
    D. ordinary opinion
    B. hypothetical condition - The zoning used for the analysis is contrary to what actually exists. This is the definition of a  hypothetical condition
    (this multiple choice question has been scrambled)
  2. When developing a real property appraisal consulting assignment:
    A. the consulting appraiser may or may not include an opinion of value
    B. the consulting appraiser must include their own opinion of value in the report
    C. the consulting appraiser must not include their own opinion in the report
    D. the opinion of value may or may not be that of the consulting appraiser
    D. the opinion of value may or may not be that of the consulting appraiser

    -An appraisal consulting assignment must include an opinion, analysis, or recommendation. The opinion of value may originate from a source other than the consulting appraiser.
    (this multiple choice question has been scrambled)
  3. Which of the following is not part of a real property consulting service?
    A. integrity
    B. advocacy
    C. Signing the certification
    D. scope of work decision
    B. advocacy

    -An appraisal consulting assignment must include a scope of work decision, a signed certification, and must be performed with integrity. However, advocacy is a violation of the ETHICS RULE
    (this multiple choice question has been scrambled)
  4. When performing an appraisal review, an appraiser may evaluate all of the following except:
    A. the quality of their work
    B. the analysis in an appraisal consulting report
    C. the relevance of another appraiser's work
    D. the competency of another appraiser
    D. the competency of another appraiser

    -An appraisal review is the development of an opinion about the quality of another appraiser's work, including the appraisal report, appraisal review report, or an appraisal consulting report. The reviewer considers the completeness, adequacy, relevance.
    (this multiple choice question has been scrambled)
  5. USPAP achieves legal authority through
    a. Title XI of FIRREA
    b. adoption, citation, or implementation by government agencies, 
    c. standards and contracts of private enterprises.
    d. a and b
    e. b and c
    f. a and c
    • b. adoption, citation, or implementation by government agencies, 
    • c. standards and contracts of private enterprises.
  6. Comments are a(n) _____part of USPAP. Comments inerpret and establish the context and conditions for the application of DEFINITIONS. Rules, and Standard Rules. They have the same weight as these components
    A. mandatory
    B. optional
    C. integral
    D. required
    C. integral
    (this multiple choice question has been scrambled)
  7. Which Standards apply to reporting an appraisal?
    A. S. 2,4,7 and 10
    B. S. 2,6,8, and 10
    C. S. 1,5,8, and 10
    D. S. 4,5,8 and 10
    B. S. 2,6,8, and 10

    S2- deals with reporting a real property appraisal
    S6- deals with developing and reporting a mass appraisal
    S8- deals with reporting a personal property appraisal
    S10 deals with reporting a business appraisal
    (this multiple choice question has been scrambled)
  8. Valuation services: 
    A. fall under the definition of appraisal practice
    B. must be performed by appraisers
    C. must comply with USPAP
    D. include appraisal practice
    D. include appraisal practice

    -Valuation services are defined as "services pertaining to aspects of property value. These services include services performed by appraisers as well as others.
    (this multiple choice question has been scrambled)
  9. Which Standards apply to developing an appraisal?
    A. 1,6,7,9
    B. 1,3,4,8
    C. 1,5,8,10
    D. 1,6,7,10
    A. 1,6,7,9

    S1- deals with real property appraisal development
    S6- deals with mass appraisal development and reporting
    S7- deals with personal property development
    S9- deals with business appraisal development
    (this multiple choice question has been scrambled)
  10. Every appraisal must contain two dates, which are the:
    a. inspection date and report date
    b. completion and effective date of valuation
    c. effective date of the appraisal and the report date
    d. effective date of valuation and filing date
    • c. effective date of the appraisal and the report date
    • According to Standards Rules 2-2[vi], the appraiser must state the effective date of the appraisal and the date of the report.
  11. A client's business partner requests information relating to an appraisal report you prepared for your client. Can you disclose the results of the appraisal for the client's business partner?
    a. no, the appraiser may disclose the results of an appraisal only to the intended user(s) listed in the report
    b. no, disclosure of the results to anyone besides the intended user is a violation of the ETHIC RULE
    c. yes, provided you receive authorization from the client before sharing any confidential information
    d. a and b
    e. b and c
    f. a and c
    • c. yes, provided you receive authorization from the client before sharing any confidential information
    • An appraiser must not disclose confidential information or assignment results prepared for a client to anyone other than the client, anyone specifically authorized by the client, state enforcement agencies, or a professional peer review committee.
  12. Which of the following are among the four rules promulgated by the Appraisal Institute?
    a. the ethics rule, and the commission rule jurisdictional exception rule, and scope of work rule
    b. the competency rule, jurisdictional exception rule, ethics rules, and the management rule
    c. the scope of work rule, ethics rule, competency rule, jurisdictional exception rule
    d. none of the above
    • d. none of the above
    • The Appraisal Institute does not write USPAP standards, statements, or rules. The Appraisal Standards Board of the Appraisal Foundation does this.
  13. What is the term for a preference or inclination that precludes an appraiser's impartiality, independence, or objectivity in an assignment?
    a. favoritism
    b. bias
    c. consulting
    d. advocacy
    • c. consulting 
    • - Bias is a preference or inclination used in the development or communication of an assignment that prevents that appraiser's impartiality. See DEFINITIONS.
  14. Which of the following is not an important element in the scope of work decision?
    A. purpose of assignment
    B. effective date of value
    C. sales history
    D. intended users
    C. sales history

    -elements in the scope of work decision include intended use, intended users, the purpose of the assignment and the type of value, the effective date(s), relevant property characteristics, and assignment conditions.
    (this multiple choice question has been scrambled)
  15. If an appraiser states the exclusion of any of the three valuation approaches, he or shes is completing which type of report?
    a. self-contained appraisal report
    b. restricted use appraisal report
    c. summary appraisal report
    d. any of the above
    • d. any of the above
    • all 3 reporting options require the appraiser to state and explain the exclusion of any of the valuation approaches.
  16. According to Standard 3, an appraiser performing an appraisal review must do all of the following except:
    A. include all known pertinent information
    B. determine the scope of work necessary to produce credible assignment results
    C. develop his or her own opinion of value
    D. identify the client, intended users, intended use and the purpose of teh assignment.
    C. develop his or her own opinion of value

    - the review appraiser may be asked to develop his or her own opinion of value, but the primary purpose of appraisal review is to form an opinion about the quality of another appraiser's work.
    (this multiple choice question has been scrambled)
  17. All of the following must be retained in an appraiser's workfile except:
    A. the client's name and the identity of any other intended user(s)
    B. a summary of any oral reports or testimony, or a transcript of testimony
    C. a complete legal description of the subject property.
    D. true copies of any written reports.
    C. a complete legal description of the subject property.

    -An appraiser's workfile must contain the name of the client and the identity of any intended users, true copies of written reports, summaries of oral reports or testimony, and any other information that supports the appraiser's opinions and compliance with USPAP.
    (this multiple choice question has been scrambled)
  18. State appraisal boards are monitored by the Appraisal Subcommittee to determine
    a. the percentage of appraisers who join appraisal organizations
    b. whether their licensing procedures are consistent with Title XI of FIRREA
    c. whether their policies are consistent with Fair Housing Laws
    d. the number of lenders using licensed or certified appraiser.
    • b. whether their licensing procedures are consistent with Title XI of FIRREA
    • The Appraisal Subcommitee was established to monitor the state regulatory agencies to determine whether their policies are consistent with title XI of FIRREA.
  19. All appraisers peers are
    A. appraisers who work in the same office together.
    B. other appraisers who have expertise and competency in a similar type of assignment
    C. other appraisers in the same general geographic area.
    D. All other appraisers
    B. other appraisers who have expertise and competency in a similar type of assignment

    -an appraiser's peers are other appraisers who have expertise and competency in a similar type of appraisal assignment.
    (this multiple choice question has been scrambled)
  20. The URAR form is what kind of appraisal report?
    A. restricted use report
    B. oral report
    C. summary appraisal report
    D. self-contained appraisal report
    C. summary appraisal report

    -the level of detail in the presentation of information found in the URAR form is consistent with the requirements for a Summary Appraisal Report.
    (this multiple choice question has been scrambled)
  21. You are asked to review an appraisal report and limit your review to only the income approach to value. 
    A. performing a review on such a small portion of the original work would provide results that are not credible
    B. can comply with this request, because of standards Rule 3-1(b)
    C. cannot comply with this request, as it violates the Competency Rule.
    D. must not comply with this request, as it violates the ETHICS RULE.
    B. can comply with this request, because of standards Rule 3-1(b)

    -An appraisal review can focus on all or part of the report, workfile, or a combination, and it may be related to an appraisal review, or appraisal consulting assignment.
    (this multiple choice question has been scrambled)
  22. An appraiser must include which of the following in every certification?
    A. number of years of appraisal experience
    B. disclosure of any hypothetical conditions, extraordinary assumptions, or limiting conditions used int he appraisal assignment
    C. length of time spent on the appraisal assignment.
    D. disclosure of any personal interest the appraiser has in the property being appraised
    D. disclosure of any personal interest the appraiser has in the property being appraised

    -an appraiser must disclose any present or prospective interest in the subject property in every certification
    (this multiple choice question has been scrambled)
  23. The purpose of an ____ assignment is to develop an analysis, recommendation, or opinion where an opinion of value is a component of the analysis leading to the assignment results.
    A. appraisal advocacy
    B. appraisal review
    C. appraisal consulting
    D. appraisal practice
    C. appraisal consulting

    -the purpose of an appraisal consulting assignment is to develop an analysis, recommendation, or opinion where an opinion of value is a component of the analysis leading to the assignment results. An appraisal consulting assignment involves an opinion of value.
    (this multiple choice question has been scrambled)
  24. Standard 5 is similar to ____ in purpose and principle
    A. 3
    B. 6
    C. 1
    D. 2
    D. 2

    -Both Standards address real property reporting obligations.
    (this multiple choice question has been scrambled)
  25. An appraiser must retain a workfile for at least:
    a. 6 years after preparation or at least 2 years after final disposition of judicial proceedings in which testimony was given, whichever period expires last.
    b. 3 years after preparation or at least 1 years after final disposition of judicial proceedings in which testimony was given, whichever period expires last.
    c. 3 years after preparation or at least 5 years after final disposition of judicial proceedings in which testimony was given, whichever period expires last.
    d. 5 years regardless of the result of the report or any testimony for judicial proceeding
    • a. 6 years after preparation or at least 2 years after final disposition of judicial proceedings in which testimony was given, whichever period expires last.
    • The Record Keeping section of the EHICS RULE states: An appraiser must retain a workfile for at least 5 years after preparation, or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related.
  26. What is an extraordinary assumption?
    A. an assumption about the value of a subject property, used by an appraiser when the research performed on the property does not yield sufficient information to estimate its value
    B. an assumption about the correct approach to value that should be used to valuate a specific subject property, used by an appraiser that is unfamiliar with the area.
    C. an assumption that is presumed to be fact about the competency of the appraiser, which if found to be false, could call into question the validity of the appraisal.
    D. an assumption that is presumed to be fact about the physical, economic, or legal condition of the subject property, which if found to be false, could alter the appraiser's estimate of value
    D. an assumption that is presumed to be fact about the physical, economic, or legal condition of the subject property, which if found to be false, could alter the appraiser's estimate of value

    -an extraordinary assumption presumes as fact uncertain information about the subject property's physical, legal, or economic characteristics, conditions external to the property; or about the integrity of that data used in analysis
    (this multiple choice question has been scrambled)
  27. In which section of analysis would you find the statement, "My compensation is not contingent upon the reporting of a predetermined value."
    A. certification statement
    B. letter of transmittal
    C. assumptions and limiting conditions
    D. cover letter
    A. certification statement

    - the certification statement deals with the appraiser's compensation.
    (this multiple choice question has been scrambled)
  28. Which provision or standard of USPAP requires an appraiser who has reviewed an appraisal to form an opinion regarding the adequacy and appropriateness of the report he or she reviewed and to clearly disclose the nature of the review process he or she used?
    A. S 3
    B. S 5
    C. COMPETENCy RULE
    D. S 6
    A. S 3

    -Standard 3 state "appraisal review is the act or process of developing and communicating an opinion about the quality of all or part of the work of another appraiser. The appraiser's opinion about the quality must encompass the completeness, adequacy, relevancy.
    (this multiple choice question has been scrambled)
  29. One example of a situation in which a hypothetical condition may be used is:
    A. when appraising proposed construction as of a current date.
    B. when an appraisal is not actually performed, but is hypothesized
    C. when the client requests a minimum value opinion for tax purposes
    D. when an appraiser does not inspect the interior and assumes the interior condition of a property is good
    A. when appraising proposed construction as of a current date.

    -a hypothetical condition assumes something about the subject property that is contrary to its actual physical, legal, or economic characteristics, external conditions such as market conditions or trends, or the integrity of the data used in analysis.
    (this multiple choice question has been scrambled)
  30. A client asks Monique to perform a rental survey on a duplex to determine if next years rent increases are competitive in the marketplace. To produce credible results, Monique also performs an appraisal of the duplex, which she includes in the:
    A. Appraisal valuation
    B. Appraisal consulting
    C. Appraisal surveying
    D. Appraisal advocacy
    B. Appraisal consulting

    - Appraisal consulting is the act or process of developing an analysis, recommendation, or opinion to solve a problem where an opinion of value is a component of the analysis leading to the assignment results. Appraisal Consulting involves an opinion of value.
    (this multiple choice question has been scrambled)
  31. An appraiser must consider and analyze any prior sales of the subject property that occurred within what period of time?
    A. two years for one-to-four family residential property and five yearse of all other property types.
    B. one year for one-to-four family residential property and three years for all other property types
    C. Three years of all property types
    D. one year for one-to-four family residential property and two years for all other property types.
    C. Three years of all property types

    - standard 1-5(b) states that an appraiser must "analyze all sales of the subject property that occurred within the last 3 years prior to the effective date of the appraisal.
    (this multiple choice question has been scrambled)
  32. If a section of USPAP is contrary to a local law, an appraiser in that area must use which of the following to complete an appraisal assignment?
    A. hypothetical condition
    B. scope of work rule
    C. jurisdictional exception rule
    D. competency rule
    C. jurisdictional exception rule

    - when the law and USPAP are in conflict, the appraiser must adhere to the law and invoke the jurisdictional exception rule.
    (this multiple choice question has been scrambled)
  33. Is an appraiser performing a review appraisal required to explain why he or she disagrees with the original appraiser?
    A. no, because the reviewer has more experience than the original appraiser
    B. Yes
    C. no, because the reviewer is expected to find flaws in the original appraisal
    D. there is no such requirement
    B. Yes

    - A review must develop an opinion of the appropriateness of the original appraiser's analyses, opinion, and conclusions, as well as develop his or her own reasons for any disagreement.
    (this multiple choice question has been scrambled)
  34. Does USPAP require every appraisal report to include a complete legal description of the subject property?
    a. yes, standards rule 2-1 requires a complete and accurate legal description
    b. no, USPAP rules 2-2 requires information to identify the real estate
    c. yes, if the report does not include a complete legal description of the subject property, the report is considered an incomplete appraisal
    d. it depends on the intended use of the appraisal report
    • b. no, USPAP rules 2-2 requires information to identify the real estate
    • -standards rule 2-2 requires the appraiser to describe information that is sufficient to identify the real estate involved in the appraisal, including the physical and economic property characteristics that are relevant to the assignment.
  35. Appraisal practice is best described as:
    A. valuation services performed by an individual acting as an appraiser.
    B. valuation services performed only by an appraiser and limited to appraisal review or appraisal consulting.
    C. performed only by an appraiser
    D. valuation services performed by an individual acting as an appraiser, but not limited to appraisal, appraisal review, or appraisal consulting
    D. valuation services performed by an individual acting as an appraiser, but not limited to appraisal, appraisal review, or appraisal consulting

    - appraisal practice is defined as valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review, or appraisal consulting.
    (this multiple choice question has been scrambled)
  36. Is it ethical if an appraiser pays a fee to be included on a lender's "approved appraiser" list?
    A. yes, provided the appraiser discloses the fee in the appraisal report
    B. no, such a situation causes a conflict of interest and compromises the validity of the appraisal report. It is a violation of the ETHIC RULE
    C. it depends on the nature of the appraisal, and the intended use and users.
    D. yes, provided the lender discloses payment of the fee to his or her borrowers
    A. yes, provided the appraiser discloses the fee in the appraisal report

    - an appraiser must disclose any fees, commissions, or things of value connected to the procurement of an assignment ni the certification and in any transmittal letter in which conclusions are stated.
    (this multiple choice question has been scrambled)
  37. If an appraiser makes his appraisal as-is but recommends that the subject property by inspected by an expert because of some observed cracks in the foundation, the appraiser's value is which of the following?
    A. not valid until the appraiser re-visits the subject property to verify correction of the problem.
    B. valid if the appraiser bases the value on an hypothetical condition
    C. valid on the day that the appraiser inspected the subject property
    D. valid only if it is inspected by an expert and no problems exist.
    B. valid if the appraiser bases the value on an hypothetical condition

    - the appraiser knows there are cracks in the foundation and will proceed to value the property as if it did not. This is contrary to its existence and is therefore a hypothetical condition. The appraiser is also using an extraordinary assumption to assume cracks were significant, then that information would alter the value of the property.
    (this multiple choice question has been scrambled)
  38. A seller asks a licensed real estate broker for his opinion of value. The broker tells the seller that he should list his home for $295,000. Which of the following is true?
    A. the broker may only perform such a task if he is also a licensed appraiser
    B. the broker may give his opinion of value at any time
    C. the broker may be guilty of a criminal action
    D. the broker may never render an opinion of value
    B. the broker may give his opinion of value at any time

    - a broker may give an opinion of value at any time. If the broker is also an appraiser, he must not mislead the client into thinking he is acting as an appraiser when he gives his opinion. With this clear understanding, brokers, property managers, agents, are expected to be an unbiased or disinterested party
    (this multiple choice question has been scrambled)
  39. USPAP contains _____ which clarify, interpret, explain, or elaborate on UsPAP and have the full weight of a Standards Rule.
    A. definitions
    B. statements
    C. advisory opinions
    D. supplemental standards
    B. statements

    - statements clarify, interpret, explain, or elaborate on USPAP. Advisory Opinions offer advice and are not part of USPAP.
    (this multiple choice question has been scrambled)
  40. Which of the following is an acceptable practice for appraisers as a matter of conducting a dignified appraisal business?
    A. agree to a referral fee for an appraisal engagement and clearly disclose such a fee to all parties relying on or otherwise using the appraisal
    B. have a compensation arrangement for an assignment that favors the cause of the client
    C. communicate assignment results in a misleading or convoluted manner so the client will not ask for additional comparables.
    D. have a compensation arrangement for an engagement, which is contingent ont he reporting of a predetermined result
    A. agree to a referral fee for an appraisal engagement and clearly disclose such a fee to all parties relying on or otherwise using the appraisal

    -disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear int he certification and in any transmittal letter in which conclusions are stated
    (this multiple choice question has been scrambled)
  41. You are practicing appraiser in Irvine, CA, and have been hired to appraise a farmhouse on 5 acres in Chowchilla, CA. You have never been to Chowchilla, but you research the average price for an agricultural land and residential properties in ChowChilla on you to do the work. So you proceed to complete the assignment and submit the report. Have you violated the COMPETENCY RULE?
    a. no, you disclosed your lack of knowledge before you started the work
    b. yes, you did not take all reasonable steps necessary to gain geographic competency
    c. yes, you must disclose any lack of knowledge of experience before accepting the assignment
    d. both yes answers
    • b. yes, you did not take all reasonable steps necessary to gain geographic competency
    • -researching sales prices on the internet will only show an appraiser specific information to the one sale he or she is looking at. It will not reveal any market characteristics or show the presence of proposed changes ni     the market place. the COMPETENCY following: ""personal study by the appraiser, association with an appraiser reasonably believed to have the necessary knowledge or experience, or retention of others who possess the required knowledge or experience."
  42. When an appraiser describe his opinion of the highest and best use of the real estate he is completing which of the following?
    A. a summary appraisal report
    B. a self-contained appraisal report
    C. a restricted appraisal report
    D. a letter report
    B. a self-contained appraisal report

    -in USPAP, standards rule 2-2 (a, requires the appraiser to describe the support and rationale for the appraiser's opinion of the highest and best use of the real estate as part of a self-contained appraisal report.
    (this multiple choice question has been scrambled)
  43. which of the following is always presumed to be prior to the appraisal's effective date and is always the opinion of the appraiser, not the client?
    A. exposure time
    B. sales time
    C. market time
    d. all of the above
    A. exposure time

    - statement 6 states: "exposure time is always presumed to precede the appraisal's effective date" and is the opinion of the appraiser.
    (this multiple choice question has been scrambled)
  44. The general requirements for developing a real property appraisal review are:
    A. very different from standard 1
    B. very similar to standard 1.
    C. non-comparable to standard 1
    D. identical to standard 1
    B. very similar to standard 1.

    - many of the general requirements are the same, just applied to a different methodology.
    (this multiple choice question has been scrambled)
  45. An appraiser sometimes pays a referral fee or commission in order to obtain appraisal assignments. This practice is:
    A. prohibited by advisory opinion 24
    B. never permitted and a violation of the management section of the ETHICS RULE
    C. sometimes necessary ni declining marketplaces
    D. allowed if it is disclosed
    D. allowed if it is disclosed

    the management section of the ETHICS RULE only discusses undisclosed fees as being a violation. An appraiser may pay a referral fee as long as it is properly disclosed in the report so that all parties are aware.
    (this multiple choice question has been scrambled)
  46. What authoritative body sets the standards that the state are required to ahere to when established appraiser qualification criteria?
    A. AQB of the appraisal Foundation
    B. appraisal institute
    C. AQB of the american society of appraisers
    D. financial investor realty
    A. AQB of the appraisal Foundation'

    - Title XI of the financial institutions Reform, Recovery, and Enforcement Act [FIRREA] sets forth the qualifications criteria set by the Appraiser Qualifications Board (AQB) of The Appraisal Foundation.
    (this multiple choice question has been scrambled)
  47. The ETHICS RULE consists of ____ sections
    A. 5
    B. 3
    C. 4
    D. 7
    C. 4

    - Conduct, Management, Confidentiality, and Record Keeping
    (this multiple choice question has been scrambled)
  48. An appraiser may perform a retrospective appraisal for a property as it was in 1995 if:
    A. the appraiser has data to support an appraisal from that period of time.
    B. the appraiser has experience appraising property during that period of time
    C.appraisers are not permitted to appraise property more than 5 years in the past.
    D. the appraiser was licensed at that time to appraise that type of property.
    A. the appraiser has data to support an appraisal from that period of time.

    - the appraiser must comply with the COMPETENCY RULE. The appraiser must be able to research data associated with the retrospective date and to analyze the data in light of market conditions as of that date. It is not necessary for the appraiser to be.
    (this multiple choice question has been scrambled)

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