An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
Correct Answer
D) A breach of the obligation to remain impartial
Why this is correct: Selecting a value based on client need, rather than an unbiased weighing of the evidence, violates the appraiser's obligation to be impartial and independent. It constitutes performing an assignment with bias toward a predetermined result. Why the other choices are wrong: This is not acceptable judgment; it is bias. A client instruction cannot override the requirement for an impartial analysis. This is not a proper scope of work decision. Exam tip: The final value must come from the evidence, not the client's desires.
Why This Is the Correct Answer
Selecting a value because the client needs that figure substitutes the client's interest for the appraiser's judgment, breaching the obligation of impartiality, objectivity and independence.
Why the Other Options Are Wrong
Option A: An acceptable exercise of appraiser judgment
Judgment must be exercised on the evidence. A conclusion driven by the client's needs is not an exercise of judgment.
Option B: A permissible response to a client instruction
Client instructions cannot direct the value conclusion. A predetermined result is expressly prohibited.
Option C: A scope of work decision properly documented
Scope of work concerns the extent of research and analysis, not which figure is concluded within the indicated range.
The Reason Is the Violation
The Reason Is the Violation. A defensible number chosen for the wrong reason is still misconduct.
How to use: Ask why you chose the figure. If the answer involves anyone's needs but the evidence, stop.
Exam Tip
The conclusion can fall inside a supportable range and still breach the Ethics Rule, which is why these questions turn on motive rather than magnitude.
Common Mistakes to Avoid
- -Assuming a figure within the range cannot be a violation
- -Treating a client's stated need as an assignment condition
- -Framing a value-driven choice as scope of work
Concept Deep Dive
Analysis
Reconciliation is a judgment about which indications are best supported, and reaching a conclusion because the client needs a particular figure substitutes the client's interest for that judgment. USPAP's Ethics Rule requires an appraiser to perform assignments with impartiality, objectivity and independence, and prohibits acting as an advocate for any party. It further prohibits accepting an assignment that is contingent on reporting a predetermined result, a direction in value, or a value that favours the client's cause — and reconciling to the top of the range for the client's benefit is the same conduct arriving by a different route. What makes this insidious is that the number chosen may fall within a defensible range, so the report looks unremarkable. The violation lies in the reason for the choice rather than in the figure itself. The correct approach is to reconcile on the evidence, and if the resulting figure does not serve the client's purpose, that is information the client is entitled to have.
Background Knowledge
USPAP's Ethics Rule requires impartiality, objectivity and independence, prohibits advocacy, and prohibits assignments contingent on a predetermined result, a direction in value, or a conclusion favouring the client's cause.
Real-World Application
An appraiser under pressure to reach a target reconciles instead to the best-supported indication and reports it, notifying the client that the figure falls short of what was hoped.
More Reconciliation Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
A client sends comments disputing the appraiser's adjustment for condition. What is the appropriate response?
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