An appraiser decides to use only the sales comparison approach for a single-family residence appraisal, excluding the cost and income approaches. Under the Scope of Work Rule, this decision:
Correct Answer
B) Is acceptable if the decision is disclosed and the scope produces credible results
The Scope of Work Rule allows appraisers flexibility in their methodology as long as the scope is appropriate for credible results and the decision is properly disclosed. Not all approaches are required if they are not necessary for credible results.
Why This Is the Correct Answer
The Scope of Work Rule allows appraisers flexibility in their methodology as long as the scope is appropriate for credible results and the decision is properly disclosed. Not all approaches are required if they are not necessary for credible results.
Why the Other Options Are Wrong
Option A: Violates USPAP because all three approaches must be used
This is incorrect because USPAP does not mandate the use of all three approaches in every appraisal. The Scope of Work Rule specifically allows appraisers to determine which approaches are necessary based on the property type, market conditions, and intended use. Requiring all three approaches regardless of circumstances would be unnecessarily rigid and potentially wasteful of resources.
Option C: Requires client approval before proceeding
Client approval is not required for scope of work decisions under USPAP. The appraiser has the professional responsibility and authority to determine the appropriate scope of work based on their professional judgment. While the appraiser should communicate with the client about the assignment parameters, the methodological decisions remain within the appraiser's professional discretion.
Option D: Is only permitted for restricted use appraisal reports
The scope of work flexibility applies to all types of appraisal reports, not just restricted use reports. Whether preparing a self-contained, summary, or restricted use report, the appraiser has the same flexibility under the Scope of Work Rule to determine appropriate methodology. The report type affects the level of detail in reporting, not the scope of work requirements.
The CDF Method
Remember CDF: Credible results, Disclose the decision, Flexibility allowed. The Scope of Work Rule gives appraisers flexibility as long as they can produce credible results and properly disclose their methodology decisions.
How to use: When you see scope of work questions, immediately think CDF - does the approach produce credible results, is it disclosed, and remember that flexibility is allowed under USPAP.
Exam Tip
Look for answer choices that emphasize 'credible results' and 'proper disclosure' when dealing with Scope of Work Rule questions - these are the key requirements rather than rigid methodology mandates.
Common Mistakes to Avoid
- -Believing all three approaches are always required by USPAP
- -Thinking client approval is needed for scope decisions
- -Assuming scope flexibility only applies to restricted reports
Concept Deep Dive
Analysis
The Scope of Work Rule in USPAP provides appraisers with professional flexibility to determine the appropriate methodology for each assignment, rather than mandating rigid adherence to all three approaches. This rule recognizes that different property types, market conditions, and assignment purposes may require different analytical approaches to achieve credible results. The key requirement is that the appraiser must be able to justify their scope decision and demonstrate that it produces reliable, credible results for the intended use. The rule emphasizes professional judgment while maintaining standards for credibility and proper disclosure.
Background Knowledge
The Scope of Work Rule is found in USPAP and requires appraisers to identify the problem to be solved, determine the scope of work necessary to develop credible assignment results, and disclose the scope of work in the report. The rule emphasizes that the scope must be appropriate for the intended use and users of the appraisal.
Real-World Application
In practice, appraisers commonly use only the sales comparison approach for typical single-family residences in active markets where sufficient comparable sales exist, as the cost and income approaches may not provide meaningful value indications for owner-occupied residential properties.
More USPAP Questions
An extraordinary assumption must be:
Under the USPAP Competency Rule, which of the following is required before an appraiser may accept an assignment?
An appraiser is developing an appraisal for a bank loan and discovers that the property has environmental contamination that significantly affects value, but the lender specifically requests that this issue not be mentioned in the report. According to USPAP, the appraiser should:
A Summary Appraisal Report must contain enough information to:
According to USPAP's Ethics Rule, an appraiser must keep confidential information about the client and intended users confidential unless disclosure is required by:
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