An appraiser completed a URAR and determined the subject property value to be $485,000. The appraiser then discovers that comparable sale #1 had an undisclosed $15,000 seller credit for repairs that should have resulted in a downward adjustment. What is the most appropriate action?
Correct Answer
A) Make a supplemental report correcting the error
Why this is correct: USPAP requires appraisers to correct significant errors affecting the value conclusion. A supplemental report is the appropriate mechanism to address the correction, explaining the error and its impact on the value. Why the other choices are wrong: Ignoring the discovery violates USPAP's ethical obligation. Amending within 30 days is not a USPAP requirement; supplemental reports have no fixed deadline. Simply notifying the client is insufficient without a corrective report. Exam tip: Significant errors require a supplemental report to correct the value conclusion.
Why This Is the Correct Answer
Option B is correct because USPAP Standards Rule 2-3 requires appraisers to correct significant errors that affect the value conclusion through a supplemental report. A supplemental report is the appropriate mechanism to address the discovered error while maintaining the integrity of the original appraisal work. This approach ensures proper documentation, maintains the appraisal file's completeness, and fulfills the appraiser's professional obligations. The supplemental report would include the corrected adjustment for comparable sale #1 and any resulting change to the final value conclusion.
Why the Other Options Are Wrong
SUPPLEMENT the ERROR
Remember 'SUPPLEMENT' - when you discover a Significant error that Undermines your Previous Professional work, you must Legally and Ethically Make Effective New Testimony through a supplemental report.
How to use: When you see questions about discovered errors after report completion, think 'SUPPLEMENT' and remember that significant errors require formal correction through supplemental reports, not informal notifications or ignoring the problem.
Exam Tip
Look for keywords like 'discovers,' 'significant error,' 'after completion' - these signal USPAP correction requirements. The answer will typically involve supplemental reports rather than ignoring errors or informal corrections.
Common Mistakes to Avoid
- -Thinking completed reports cannot be corrected
- -Believing informal client notification is sufficient
- -Confusing supplemental reports with amended reports
- -Not recognizing when errors are significant enough to require correction
Concept Deep Dive
Analysis
This question tests knowledge of USPAP requirements for handling significant errors discovered after report completion. The Uniform Standards of Professional Appraisal Practice (USPAP) establishes clear protocols for appraisers when material errors are found that could affect the value conclusion. A $15,000 undisclosed seller credit represents a significant error that would require a downward adjustment to comparable sale #1, potentially affecting the overall value conclusion. The appraiser has an ethical and professional obligation to correct this error through proper channels rather than ignoring it or handling it informally.
Background Knowledge
USPAP Standards Rule 2-3 addresses the appraiser's responsibility when significant errors are discovered after report completion. A supplemental report is a formal addendum that corrects or updates information in the original appraisal without requiring a complete new report.
Real-World Application
In practice, appraisers might discover undisclosed seller concessions, incorrect property information, or calculation errors after submitting reports. Professional liability and USPAP compliance require formal correction through supplemental reports to protect both the appraiser and report users.
More USPAP Questions
An appraiser is analyzing three comparable sales with the following data: Sale 1: $350,000 with +$10,000 adjustments; Sale 2: $340,000 with -$5,000 adjustments; Sale 3: $360,000 with -$15,000 adjustments. What are the adjusted sale prices?
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