Under Standards Rule 2-2(a), what must an Appraisal Report state if a sales comparison, cost or income approach was not developed?
Correct Answer
A) The reason for excluding any approach that was not developed
An Appraisal Report must explain reasons for excluding an approach not developed. This does not require a full unused calculation, nor does explanation make an inadequate overall analysis credible. Determine that the performed work supports credible results.
Why This Is the Correct Answer
Option A is correct because SR 2-2(a) requires the report to state the reasons for excluding the sales comparison, cost, or income approach(es) if any have not been developed. The requirement covers any omitted approach. The appraiser must also be sure the work that was performed supports credible results.
Why the Other Options Are Wrong
Option B: The reason for omitting sales comparison, but not other approaches
Option B limits the explanation to omitting sales comparison only. The rule names all three approaches, so excluding the cost or income approach also requires a stated reason.
Option C: No explanation is needed for omitted approaches
Option C says no explanation is needed for omitted approaches. SR 2-2(a) expressly requires stating the reasons for excluding any approach not developed.
Option D: Full calculations for all three approaches, applicable or not
Option D requires full calculations for all three approaches whether applicable or not. The rule requires reasons for exclusion, not calculations for approaches that were not necessary.
Skip It, Say Why
Any approach you skip needs a stated reason in the report, but not a worked calculation.
How to use: Use this when a question asks what to report about an approach that was not developed.
Exam Tip
Choose the answer that requires reasons for any excluded approach; reject answers that require no explanation or full unused calculations.
Common Mistakes to Avoid
- -Leaving an excluded approach unexplained
- -Thinking only the sales comparison approach needs an exclusion reason
- -Believing a written reason makes an inadequate analysis credible
Concept Deep Dive
Analysis
This question tests what an Appraisal Report must say when an approach is not developed. SR 2-2(a) requires stating the reasons for excluding the sales comparison, cost or income approach if any has not been developed. The rule applies to each of the three approaches, and it calls for an explanation, not calculations for the unused approach.
Background Knowledge
Explaining excluded approaches lets intended users understand the scope of the analysis. An explanation does not cure an inadequate analysis: if an approach was necessary for credible results, omitting it is a development problem that a written reason cannot fix.
Real-World Application
In an Appraisal Report on a single-family home in a mostly owner-occupied area, the appraiser explains that the income approach was not developed because there is too little rental data and buyers do not purchase such homes for income.
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