An appraiser is developing a narrative report for a complex commercial property. The client requests that certain approaches to value be excluded. How should the appraiser handle this request?
Correct Answer
B) Determine scope of work based on what is necessary and appropriate
Determine which approaches are needed for credible results. A client may request exclusions, but an exclusion that precludes credibility cannot be accepted merely to preserve the relationship. Seek a permissible change to the assignment conditions; decline or withdraw if the conflict remains unresolved. Unnecessary approaches need not be developed just to override a preference. Report the actual scope and explain excluded approaches as required.
Why This Is the Correct Answer
Option B is correct because USPAP requires the appraiser to properly identify the problem to determine the appropriate scope of work, and not to let assignment conditions limit scope to the point that results are not credible. The appraiser evaluates whether the requested exclusions still allow credible results. If they do not, the appraiser seeks a permissible change or declines or withdraws.
Why the Other Options Are Wrong
Option A: Include all three approaches, since the client cannot limit scope
Option A includes all three approaches because the client cannot limit scope. Clients can request assignment conditions, and USPAP does not require approaches that are not necessary for credible results.
Option C: Comply with the client's request to maintain the relationship
Option C complies with the client's request to maintain the relationship. Keeping a client relationship is not a valid basis for scope decisions, and an exclusion that prevents credible results cannot be accepted for that reason.
Option D: Use the approach that best supports the client’s expectations
Option D uses the approach that best supports the client's expectations. Selecting approaches to fit a client's expected result compromises impartiality and does not reflect what is necessary for credible results.
Credibility decides the scope
Client requests are inputs; what is necessary for credible results decides which approaches are developed.
How to use: Use this to evaluate any option that bases scope on client wishes or rigid rules.
Exam Tip
Reject both extremes, doing all approaches by default or simply following the client; the answer turns on necessity for credible results.
Common Mistakes to Avoid
- -Believing all three approaches are required in every assignment
- -Letting client relationships drive the scope of work
- -Failing to explain excluded approaches in the report
Concept Deep Dive
Analysis
This question tests how a client's request to exclude approaches fits within the Scope of Work Rule. The appraiser must identify the problem and determine which approaches are necessary for credible results. A client may request exclusions, but the appraiser cannot let them reduce the scope below what credibility requires, and need not develop approaches that are unnecessary.
Background Knowledge
The appraiser, not the client, is responsible for determining the scope of work needed for credible results. Clients may set assignment conditions, but those conditions are acceptable only if credible results can still be produced. The report must describe the scope of work performed and explain the exclusion of any of the usual approaches.
Real-World Application
A client asks an appraiser to skip the cost approach for an older office building. The appraiser concludes that the sales comparison and income approaches give credible results for the intended use, accepts the condition, and explains the exclusion in the report.
More USPAP Questions
An appraiser signs, finalizes and electronically transmits a residential appraisal report to the client on March 15. Its value opinion has a March 1 effective date. The client does not open the transmitted report until March 20. What is the report date?
The Dodd-Frank Act's appraisal provisions primarily focus on:
According to AQB criteria, what is the minimum number of classroom hours of qualifying education required for a Certified Residential appraiser?
In a Fannie Mae appraisal, which item does not belong in the appraiser's site analysis?
After delivering a $485,000 URAR, an appraiser discovers a previously undisclosed $15,000 seller repair credit on a comparable sale that may materially change the analysis. What is the most appropriate response?
The special appraisal requirements in Regulation Z §1026.35(c), adopted under Dodd-Frank, concern which covered mortgage category?
A state appraiser regulatory agency is reviewing an appraiser's continuing education compliance. The appraiser completed 28 hours of continuing education in the current two-year period, including 5 hours of USPAP update training. Does this meet AQB requirements?
According to USPAP Standard 2, which of the following is NOT a required element in an appraisal report?
A client asks an appraiser to raise a completed report’s value conclusion by $15,000 solely to match the contract price, without providing new evidence. What should the appraiser do?
A comparable-sale grid includes a $5,000 bathroom adjustment. Which treatment best supports clear appraisal reporting?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Related Tools
Previous Question
A private nonbank mortgage company is not directly subject to the federal banking agencies’ Title XI appraisal regulations. What follows from that fact alone?
Next Question
Assuming the other elements of the federal AMC definition are satisfied, what panel-size threshold applies within the specified 12-month period?