A lender instructs: 'appraise as though the deferred maintenance has been repaired' for a renovation loan. How must the appraiser handle the finished-condition value?
Correct Answer
A) As a hypothetical condition, clearly disclosed, with the intended use stated
Why this is correct: Valuing a property "as though" repairs are complete uses a hypothetical condition (contrary to current fact). This is a standard practice for renovation loans. The report must clearly disclose the hypothetical condition and state the intended use. Why the other choices are wrong: Refusing is not required; this is a common assignment type. Averaging values is not the correct method. A confidential side letter does not satisfy the disclosure requirement in the report. Exam tip: 'As-repaired' values require a hypothetical condition. Disclose it prominently so no one mistakes it for the as-is value.
Why This Is the Correct Answer
Why this is correct: Valuing a property "as though" repairs are complete uses a hypothetical condition (contrary to current fact). This is a standard practice for renovation loans. The report must clearly disclose the hypothetical condition and state the intended use. Why the other choices are wrong: Refusing is not required; this is a common assignment type. Averaging values is not the correct method. A confidential side letter does not satisfy the disclosure requirement in the report. Exam tip: 'As-repaired' values require a hypothetical condition. Disclose it prominently so no one mistakes it for the as-is value.
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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