An appraiser pays a marketing firm a fee for each assignment it brings in. What does USPAP require?
Correct Answer
A) Disclosure of the payment for procuring the assignment in the certification
Why this is correct: The governing USPAP principle is that while paying a fee to procure an assignment is permissible, it must not be concealed. The appraiser's certification must explicitly disclose that compensation was paid for obtaining the assignment. This ensures transparency, allowing the client to understand the origin of the engagement. Why the other choices are wrong: The choice stating 'Nothing whatsoever, since marketing costs are purely a private business matter' is wrong because USPAP specifically mandates disclosure of such referral fees. The choice stating 'Refusal of all assignments obtained through any paid channel' is wrong because USPAP does not prohibit paid procurement; it only requires disclosure. The choice stating 'A discount to the client equal to the referral fee paid' is wrong because USPAP does not require a financial offset; it requires transparency through disclosure. Exam tip: Remember the USPAP mantra: 'Permitted but not concealable.' Any fee for procuring an assignment triggers a mandatory disclosure in the certification.
Why This Is the Correct Answer
Why this is correct: The governing USPAP principle is that while paying a fee to procure an assignment is permissible, it must not be concealed. The appraiser's certification must explicitly disclose that compensation was paid for obtaining the assignment. This ensures transparency, allowing the client to understand the origin of the engagement. Why the other choices are wrong: The choice stating 'Nothing whatsoever, since marketing costs are purely a private business matter' is wrong because USPAP specifically mandates disclosure of such referral fees. The choice stating 'Refusal of all assignments obtained through any paid channel' is wrong because USPAP does not prohibit paid procurement; it only requires disclosure. The choice stating 'A discount to the client equal to the referral fee paid' is wrong because USPAP does not require a financial offset; it requires transparency through disclosure. Exam tip: Remember the USPAP mantra: 'Permitted but not concealable.' Any fee for procuring an assignment triggers a mandatory disclosure in the certification.
More USPAP Questions
Which type of appraisal report may contain the appraiser's analyses, opinions, and conclusions but is intended for use by the client only?
How long must an appraiser retain the workfile for an appraisal assignment under USPAP?
If an appraiser uses a hypothetical condition that the subject property is 10% larger than it actually is, this must be:
Under Standard 1, when developing a real property appraisal, an appraiser must:
An appraiser accepts an assignment to appraise a specialized industrial property but has never appraised this property type before. To comply with the Competency Rule, the appraiser:
According to the Scope of Work Rule, the scope of work must be appropriate to the:
According to Standard 1, when developing an opinion of market value, an appraiser must analyze:
A lender emails: 'We need at least $450,000 to make this loan work — can you take the assignment?' Accepting on that basis is:
An appraiser is developing an opinion of market value for a 20-unit apartment building. The appraiser finds three comparable sales with the following information: Sale 1: 18 units, sold for $1,800,000; Sale 2: 22 units, sold for $2,200,000; Sale 3: 24 units, sold for $2,280,000. What is the average price per unit for these comparables?
In developing a scope of work, an appraiser must consider all of the following factors EXCEPT:
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