After delivery, an appraiser verifies that a comparable’s sale circumstances were materially misreported and significantly affect the analysis. What is the appropriate response?
Correct Answer
C) Assess the error, tell the client and provide a supported correction
A known material error must not be ignored or left as a knowingly misleading communication. Assess its effect, communicate appropriately with the client, and provide a clear supported correction with appropriate report identification and retained records. SR 2-3 is the certification rule, not a universal correction-format protocol. Foreclosure or REO circumstances require verification and market analysis; such a sale is not automatically unusable or subject to a fixed adjustment.
Why This Is the Correct Answer
Option C is correct because a known material error that significantly affects the analysis must not be left in a report that would then mislead users. The appraiser assesses its effect, tells the client and provides a clear, supported correction while keeping records in the workfile.
Why the Other Options Are Wrong
Option A: Send a brief message saying the old value still stands
Option A is wrong because sending a brief message saying the old value still stands skips the needed assessment. The error significantly affects the analysis, so the conclusion has to be re-examined and supported.
Option B: Record the discovery in the workfile without telling the client
Option B is wrong because recording the discovery in the workfile without telling the client leaves a knowingly misleading report in use. The client needs to be informed.
Option D: Wait for the client to find the error on its own and then ask
Option D is wrong because waiting for the client to find the error on its own leaves a known material problem uncorrected. The appraiser should act once the error is verified.
Find it, flag it, fix it
When a material error surfaces, assess the impact, tell the client and deliver a supported correction.
How to use: Use this for questions about errors discovered after a report is delivered.
Exam Tip
Answers that hide, ignore or wait on a known material error are not acceptable responses.
Common Mistakes to Avoid
- -Keeping a known error only in the workfile
- -Affirming the old value without reanalysis
- -Assuming the client is responsible for finding errors
Concept Deep Dive
Analysis
This question tests the response to a material error discovered after delivery. The appraiser cannot leave a known misleading report in place and should assess the error, inform the client and provide a supported correction.
Background Knowledge
USPAP prohibits substantial errors of omission or commission that significantly affect an appraisal and requires reports that are not misleading. When a significant problem is found after delivery, a clear correction protects intended users.
Real-World Application
After delivering a report, an appraiser learns that a comparable reported as an arm's-length sale was actually a transfer between relatives. The appraiser re-analyzes the comparables, notifies the client and issues a clearly identified corrected report.
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A comparable-sale grid includes a $5,000 bathroom adjustment. Which treatment best supports clear appraisal reporting?