An appraiser discovers that a comparable sale used in an appraisal was actually an estate sale at below-market value. This information was not available during the original research. What should the appraiser do?
Correct Answer
B) Notify the users if it would change the conclusions
Why this is correct: The USPAP Ethics Rule requires an appraiser to notify the client and other intended users upon discovering information that would significantly change the report's opinions or conclusions, even if discovered after the report was issued. Why the other choices are wrong: "Immediately revise the appraisal and issue a new report" is not the first required step; notification comes first. "File a supplemental report with the state regulator" is not a standard USPAP requirement for this scenario. "Do nothing, as the information was not then available" violates the post-appraisal discovery obligation under the Ethics Rule. Exam tip: For post-report discoveries, remember: notify users first if it changes conclusions.
Why This Is the Correct Answer
Option C correctly identifies the appraiser's obligation under the Ethics Rule when subsequently discovering material information. The rule specifically requires appraisers to notify the client and other intended users when they discover information that would cause them to change their opinions or conclusions. This notification requirement ensures transparency and maintains the integrity of the appraisal process. The appraiser doesn't necessarily need to revise the entire report immediately, but must inform all parties who relied on the original appraisal.
Why the Other Options Are Wrong
NOTIFY First Rule
Remember 'NOTIFY' - New information that's Obviously material requires Telling Intended users and Facilitating Your professional responsibility. Always notify FIRST before taking other actions like revising or filing reports.
How to use: When you see questions about subsequently discovered information, immediately think 'NOTIFY first' - the appraiser's first obligation is always to inform the client and intended users before taking any other corrective action.
Exam Tip
Look for keywords like 'subsequently discovered,' 'later found out,' or 'new information came to light' - these signal Ethics Rule questions about ongoing professional responsibility and notification requirements.
Common Mistakes to Avoid
- -Thinking responsibility ends when the appraisal is delivered
- -Believing immediate revision is required before notification
- -Assuming state regulatory filing is the primary obligation
Concept Deep Dive
Analysis
This question tests knowledge of the Ethics Rule regarding subsequent discovery of material information that could affect an appraisal's conclusions. The scenario involves discovering that a comparable sale was an estate sale at below-market value, which is a significant factor that could materially impact the appraisal's accuracy and conclusions. The appraiser must understand their ongoing professional responsibility even after completing an assignment when new material information comes to light. This reflects the principle that appraisers have a continuing duty to maintain the integrity and reliability of their work when circumstances change.
Background Knowledge
The Ethics Rule in USPAP establishes ongoing responsibilities for appraisers even after completing an assignment. When appraisers discover information that would materially affect their conclusions, they must notify those who relied on the original work to maintain professional integrity and prevent potential harm from outdated conclusions.
Real-World Application
In practice, appraisers might discover after completing an appraisal that a comparable sale was a foreclosure, estate sale, or involved seller concessions not initially known. The appraiser must promptly contact the client (often a lender) and any other parties who received the appraisal to inform them of this material information that could affect lending decisions or property valuations.
More USPAP Questions
Which statement best defines a hypothetical condition under USPAP?
According to the Competency Rule, if an appraiser lacks the knowledge and experience to complete an assignment competently, which action is NOT acceptable?
An appraiser runs only the sales comparison approach on a standard tract home and omits the cost and income approaches. Under Standard 1 this is:
A value opinion for a subdivision as if fully built out two years from now is what kind of assignment, and what does it require?
A hypothetical condition differs from an extraordinary assumption in that a hypothetical condition:
An appraiser must disclose in the certification whether they have:
A client-imposed requirement — 'use only comps from our approved list' — is best described as:
Under Standard 1, when developing a real property appraisal, an appraiser must:
The certification required by Standards Rule 2-3 must be signed by:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
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