An appraiser is offered $200 for work usually priced at $450. No market-fee study is available, and it is not known whether a customary-and-reasonable fee requirement applies. What is the sound response?
Correct Answer
C) Assess the applicable fee requirement and ability to perform adequate work; negotiate or decline as needed
An appraiser’s usual fee alone does not establish whether an offered fee violates covered customary-and-reasonable requirements. Assess the applicable rule and comparable market services; negotiate or decline if needed. Regardless of fee, accept only if competent work with adequate scope can be performed.
Why This Is the Correct Answer
Option C is correct because without market-fee or coverage facts, the appraiser cannot conclude a violation from the fee alone; the appraiser should assess the applicable requirement and comparable market rates. Regardless of fee, the appraiser accepts only if competent work with adequate scope can be performed, and otherwise negotiates or declines.
Why the Other Options Are Wrong
Option A: Reduce the necessary scope in proportion to the fee
Option A says to reduce the necessary scope in proportion to the fee. Scope of work is driven by what credible results require, not by the fee, so cutting necessary work to match a lower fee is improper.
Option B: Treat the appraiser’s usual personal fee alone as conclusive proof of a federal fee violation by the lender
Option B treats the appraiser's usual personal fee of $450 alone as conclusive proof of a federal fee violation by the lender. Customary and reasonable compensation is measured against recent rates for comparable services in the geographic market, and the requirement applies to covered transactions, so one appraiser's usual fee does not prove a violation.
Option D: Accept any fee and cure inadequate work with a disclaimer
Option D says to accept any fee and cure inadequate work with a disclaimer. A disclaimer does not make inadequate work credible, and accepting regardless of ability to perform competently is improper.
Fee does not shrink scope
The fee affects whether you accept the job, not how much work credible results require. Assess, then negotiate or decline.
How to use: Use this when a fee question tempts you to cut the work to fit the pay.
Exam Tip
Avoid options that reach firm legal conclusions from limited facts or that adjust scope to match pay.
Common Mistakes to Avoid
- -Reducing the scope of work to match a low fee
- -Treating a personal standard fee as proof of a regulatory violation
- -Relying on a disclaimer to excuse inadequate work
Concept Deep Dive
Analysis
This question tests how an appraiser should respond to a low fee offer when facts about market rates and regulatory coverage are not given. The appraiser's usual fee alone does not prove a customary and reasonable fee violation. The appraiser should assess the applicable requirement and whether competent, adequate work can be done, then negotiate or decline as needed.
Background Knowledge
Regulation Z requires creditors and their agents in covered transactions to pay customary and reasonable fees for comparable services in the property's geographic market. Separately, USPAP requires that the scope of work be sufficient for credible results regardless of the fee. An appraiser can negotiate fees or decline assignments that cannot be performed adequately.
Real-World Application
An appraisal management company offers an appraiser a fee well below what the appraiser normally charges for a complex rural property. The appraiser compares recent fees for similar work in that market, explains the required effort, and declines when the company will not adjust the fee.
More USPAP Questions
An appraiser signs, finalizes and electronically transmits a residential appraisal report to the client on March 15. Its value opinion has a March 1 effective date. The client does not open the transmitted report until March 20. What is the report date?
The Dodd-Frank Act's appraisal provisions primarily focus on:
According to AQB criteria, what is the minimum number of classroom hours of qualifying education required for a Certified Residential appraiser?
In a Fannie Mae appraisal, which item does not belong in the appraiser's site analysis?
After delivering a $485,000 URAR, an appraiser discovers a previously undisclosed $15,000 seller repair credit on a comparable sale that may materially change the analysis. What is the most appropriate response?
The special appraisal requirements in Regulation Z §1026.35(c), adopted under Dodd-Frank, concern which covered mortgage category?
A state appraiser regulatory agency is reviewing an appraiser's continuing education compliance. The appraiser completed 28 hours of continuing education in the current two-year period, including 5 hours of USPAP update training. Does this meet AQB requirements?
According to USPAP Standard 2, which of the following is NOT a required element in an appraisal report?
A client asks an appraiser to raise a completed report’s value conclusion by $15,000 solely to match the contract price, without providing new evidence. What should the appraiser do?
A comparable-sale grid includes a $5,000 bathroom adjustment. Which treatment best supports clear appraisal reporting?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam