A URAR form indicates 'Subject to completion per plans and specifications' in the sales comparison approach. This means:
Correct Answer
B) The property is under construction
When 'Subject to completion per plans and specifications' appears on a URAR, it indicates the subject property is under construction and the appraisal is based on the property as if complete according to the provided plans and specifications. This is a prospective value as of completion.
Why This Is the Correct Answer
Option B correctly identifies that this notation specifically indicates the subject property is under construction. When an appraiser uses this language, they are clearly communicating that the property being appraised is not yet complete and that the valuation is based on the assumption that construction will be finished according to the provided plans and specifications. This is standard appraisal terminology used specifically for properties in various stages of construction. The phrase directly relates to the physical construction status of the subject property itself.
Why the Other Options Are Wrong
Option A: The appraisal is hypothetical
While the appraisal does involve assumptions about future completion, it is not classified as hypothetical. A hypothetical appraisal involves assumptions that are contrary to known facts, whereas this appraisal is based on the realistic expectation that construction will be completed as planned.
Option C: The value is subject to completion of repairs
This notation is not about repairs to an existing structure but rather about completing new construction. Repairs imply fixing or restoring existing elements, while this phrase specifically relates to finishing construction work that is already in progress.
Option D: The comparable sales are proposed construction
The notation refers to the subject property being under construction, not the comparable sales. The comparable sales used in the analysis are typically completed properties that help establish value for the subject upon completion.
SPEC = Subject Property Expecting Completion
Remember SPEC: when you see 'Subject to completion per plans and SPECifications,' think 'Subject Property Expecting Completion' - this always means the subject property itself is under construction.
How to use: When you encounter this phrase on exam questions, immediately think SPEC and remember it's about the subject property being under construction, not about hypothetical conditions or comparable properties.
Exam Tip
Look for key words like 'subject to completion' and 'plans and specifications' - these phrases specifically indicate construction in progress on the subject property, not repair work or hypothetical scenarios.
Common Mistakes to Avoid
- -Confusing this with hypothetical appraisal conditions
- -Thinking it refers to comparable sales rather than the subject property
- -Mistaking construction completion for repair completion
Concept Deep Dive
Analysis
The phrase 'Subject to completion per plans and specifications' on a URAR form is a specific appraisal condition that indicates the subject property is currently under construction or incomplete. This notation tells the reader that the appraiser has valued the property based on its anticipated completed state according to provided architectural plans and construction specifications. The appraisal represents a prospective value opinion, meaning it estimates what the property will be worth once construction is finished according to the plans. This is different from appraising existing completed properties or making hypothetical assumptions about potential improvements.
Background Knowledge
Appraisers must clearly communicate the condition and status of properties being valued, especially when they are incomplete. The URAR (Uniform Residential Appraisal Report) form has specific language and notations to indicate different property conditions and appraisal assumptions.
Real-World Application
This notation is commonly used when appraising new home construction for construction loans, where lenders need to know the anticipated value upon completion to determine loan amounts and release construction funds at various stages.
More Report Writing Questions
Under FIRREA, which federal agency has the authority to set minimum standards for real estate appraisals in federally related transactions?
What is the minimum transaction threshold for requiring a state licensed or certified appraiser under Title XI for most federally related transactions?
The Dodd-Frank Act established which requirement specifically related to appraisal independence?
Which of the following is NOT a responsibility of the Appraisal Subcommittee (ASC)?
State appraiser regulatory agencies are primarily responsible for which of the following functions?
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