A lender obtains an AVM estimate and asks a state-certified appraiser to sign it. Under the federal agencies’ appraisal regulations, what is the signed AVM output?
Correct Answer
D) Not an appraisal, since it was not developed under USPAP by the appraiser
The result of an AVM, by itself or signed by an appraiser, is not an appraisal, because a state certified or licensed appraiser must perform an appraisal in conformance with USPAP and the agencies’ minimum appraisal standards.
Why This Is the Correct Answer
Option D is correct because, under the agencies' appraisal regulations, the result of an AVM, by itself or signed by an appraiser, is not an appraisal. A state certified or licensed appraiser must perform an appraisal in conformance with USPAP and the agencies' minimum appraisal standards, and signing model output does not meet that requirement.
Why the Other Options Are Wrong
Option A: An appraisal, since a state-certified appraiser signed the output
Option A is wrong because a state-certified appraiser signing the output does not make it an appraisal. The Interagency Guidelines state that AVM output signed by an appraiser is still not an appraisal.
Option B: An appraisal review of the AVM vendor’s model and of its output data
Option B is wrong because signing the output is not an appraisal review of the AVM vendor's model and output data. An appraisal review is a separate assignment with its own development and reporting requirements, and a signature alone does not create one.
Option C: A restricted appraisal report prepared for the lender as client
Option C is wrong because signed AVM output is not a restricted appraisal report prepared for the lender. A restricted appraisal report is a reporting option for an appraisal the appraiser has actually developed under USPAP.
A signature is not an appraisal
Putting an appraiser's name on AVM output does not turn it into an appraisal. The appraiser must do the appraisal.
How to use: Use this when a question asks whether signed model output qualifies as an appraisal.
Exam Tip
When an option relies on a signature or credential to change what a product is, be skeptical. The work performed, not the signature, defines an appraisal.
Common Mistakes to Avoid
- -Believing a certified appraiser's signature converts AVM output into an appraisal
- -Calling a signed AVM printout an appraisal review
- -Confusing a reporting option with the development of an appraisal
Concept Deep Dive
Analysis
This question tests the federal agencies' position on AVM output signed by an appraiser. A signature does not transform model output into an appraisal. An appraisal must be performed by a state certified or licensed appraiser in conformance with USPAP and the agencies' minimum standards.
Background Knowledge
The Interagency Appraisal and Evaluation Guidelines distinguish appraisals from evaluations and AVM output. An appraisal requires a certified or licensed appraiser to develop the value opinion under USPAP and the agencies' minimum standards.
Real-World Application
A lender asks a certified appraiser to sign an AVM printout so it can go in the loan file as an appraisal. The appraiser explains that signing it would not make it an appraisal and offers to perform an actual appraisal assignment instead.
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