A lender makes acceptance of an assignment conditional on reporting at least a specified value, regardless of the analysis. What should the appraiser do?
Correct Answer
C) Refuse the value condition, and decline or withdraw if it remains
An appraiser cannot agree to a predetermined value result or allow the client’s desired outcome to control the analysis. Seek terms that permit an impartial, credible assignment. If the unacceptable condition cannot be removed, decline or withdraw rather than deliver a biased or misleading result. A disclaimer does not cure an agreement to reach a target.
Why This Is the Correct Answer
Option C is correct because an appraiser must not agree to perform an assignment contingent on reporting a predetermined result such as an opinion of value. The appraiser should seek terms that allow an impartial, credible assignment. If the lender insists on the value condition, declining or withdrawing is the proper response.
Why the Other Options Are Wrong
Option A: Accept the target, as long as a disclaimer describes the pressure
Option A, accepting the target as long as a disclaimer describes the pressure, is wrong because a disclaimer does not cure an agreement to reach a predetermined value.
Option B: Accept the condition and choose comparables that will reach it
Option B, accepting the condition and choosing comparables that will reach it, is wrong because it combines a prohibited agreement with biased, results-driven analysis.
Option D: Treat the lender’s minimum figure as the definition of market value
Option D, treating the lender's minimum figure as the definition of market value, is wrong because market value is defined by market conditions and an accepted definition, not by a client's required number.
Target value means walk away
If the client sets the number first, refuse the condition; if it stays, walk away.
How to use: Use this when a question attaches a minimum or target value to an assignment.
Exam Tip
When a client requires a specific result, the best answer refuses the condition rather than trying to manage it with disclosure.
Common Mistakes to Avoid
- -Believing a disclaimer allows a predetermined-value assignment
- -Selecting comparables to hit a target
- -Treating a client's number as market value
Concept Deep Dive
Analysis
This question tests the response to a client condition requiring a minimum value regardless of analysis. USPAP prohibits agreeing to an assignment contingent on reporting a predetermined result. The appraiser should refuse the condition and decline or withdraw if it cannot be removed.
Background Knowledge
The ETHICS RULE bars assignments and compensation contingent on a predetermined result, a direction favoring the client, the amount of a value opinion, a stipulated result, or a related subsequent event. Regulation Z also prohibits coercion of appraisers in covered transactions. Appraisers protect independence by refusing such conditions.
Real-World Application
A lender's order states that the appraisal must support at least the contract price. The appraiser asks to have the condition removed, and declines the order when the lender will not change it.
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