A client offers an appraiser a bonus if the value comes in at or above the contract price. Accepting would violate which part of the Ethics Rule?
Correct Answer
A) The Management section, which bars contingent compensation
Why this is correct: The Management section of the Ethics Rule explicitly prohibits compensation contingent on a predetermined result, such as a value hitting a target. This fee structure compromises independence and objectivity from the start, making the arrangement unethical regardless of the final number. Why the other choices are wrong: The Record Keeping Rule concerns file retention, not fee arrangements. The Competency Rule deals with knowledge and disclosure of ability, not compensation. Accepting a contingent fee is a violation; a justified value does not cure the unethical agreement. Exam tip: Any fee tied to a specific value outcome, loan approval, or closing is prohibited. The corruption is in the arrangement, not the result.
Why This Is the Correct Answer
Why this is correct: The Management section of the Ethics Rule explicitly prohibits compensation contingent on a predetermined result, such as a value hitting a target. This fee structure compromises independence and objectivity from the start, making the arrangement unethical regardless of the final number. Why the other choices are wrong: The Record Keeping Rule concerns file retention, not fee arrangements. The Competency Rule deals with knowledge and disclosure of ability, not compensation. Accepting a contingent fee is a violation; a justified value does not cure the unethical agreement. Exam tip: Any fee tied to a specific value outcome, loan approval, or closing is prohibited. The corruption is in the arrangement, not the result.
More USPAP Questions
Which type of appraisal report may contain the appraiser's analyses, opinions, and conclusions but is intended for use by the client only?
How long must an appraiser retain the workfile for an appraisal assignment under USPAP?
If an appraiser uses a hypothetical condition that the subject property is 10% larger than it actually is, this must be:
Under Standard 1, when developing a real property appraisal, an appraiser must:
An appraiser accepts an assignment to appraise a specialized industrial property but has never appraised this property type before. To comply with the Competency Rule, the appraiser:
According to the Scope of Work Rule, the scope of work must be appropriate to the:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
A lender emails: 'We need at least $450,000 to make this loan work — can you take the assignment?' Accepting on that basis is:
An appraiser is developing an opinion of market value for a 20-unit apartment building. The appraiser finds three comparable sales with the following information: Sale 1: 18 units, sold for $1,800,000; Sale 2: 22 units, sold for $2,200,000; Sale 3: 24 units, sold for $2,280,000. What is the average price per unit for these comparables?
In developing a scope of work, an appraiser must consider all of the following factors EXCEPT:
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