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:
Correct Answer
C) Proper if they are unnecessary for credible results and the exclusion is explained
Why this is correct: USPAP requires the appraiser to use the approaches necessary for credible results. For a standard tract home with ample comparable sales, the sales comparison approach alone may be sufficient. The appraiser must explain in the report why other approaches were excluded. Why the other choices are wrong: All three approaches are not always mandatory. A lender's waiver does not override USPAP's credibility requirement. It is not automatic grounds for review if properly justified. Exam tip: You don't need all three approaches if you can justify why the ones used are sufficient for credibility.
Why This Is the Correct Answer
Proper if they are unnecessary for credible results and the exclusion is explained captures both halves, the substantive judgment and the disclosure that must accompany it. Developing only the sales comparison approach on a tract home with ample comparable sales is ordinary competent practice, and forcing a cost or income approach where neither informs the conclusion would add pages without adding credibility. What the appraiser cannot do is omit an approach silently, because the reader is entitled to know which approaches were developed and why any were excluded. The explanation should be specific to the assignment rather than boilerplate, saying what evidence made the sales comparison approach sufficient and why the excluded approaches would not have improved the result.
Why the Other Options Are Wrong
Option A: A per-se violation, since all three classic approaches are always mandatory in every assignment
No requirement makes all three approaches mandatory in every assignment, and the standards are deliberately written around necessity for credible results rather than around a fixed set of procedures. Applying an approach that contributes nothing can even weaken a report by presenting an indication the appraiser then has to explain away. Candidates pick this because the three approaches are taught as a framework, mistaking a teaching structure for a universal mandate.
Option B: Acceptable only with the lender's written waiver
A client cannot waive the appraiser's obligation to produce credible assignment results, and assignment conditions supplied by a client never override the standards. Clients do legitimately influence scope of work through the intended use and intended users they identify, but the sufficiency judgment belongs to the appraiser. This is the most dangerous wrong answer because client-driven scope pressure is a live issue in practice, and the profession's answer is that the appraiser owns the decision.
Option D: Grounds for automatic license review
Nothing about developing one approach triggers disciplinary review when the decision is appropriate to the assignment and explained in the report, and vast numbers of residential appraisals proceed exactly this way. Regulatory attention follows deficient work, not the ordinary exercise of judgment the standards contemplate. Candidates select this by treating any deviation from a full three-approach report as a compliance exposure, which misreads how the standards are written.
Necessary, Not Mandatory
The standards never say run all three. They say produce a credible result and tell the reader what you did and did not do. Sufficiency is the test, and the explanation is the receipt.
How to use: When a stem asks whether omitting an approach is acceptable, look for the option pairing necessity with disclosure. Options making all three mandatory, letting a client waive the requirement, or predicting automatic discipline are each replacing a judgment standard with a rule that does not exist.
Exam Tip
Two things earn the credit in scope questions: the decision was appropriate for credible results, and the report says so. An answer with only one half is incomplete.
Common Mistakes to Avoid
- -Omitting an approach without stating in the report that it was excluded and why
- -Using boilerplate exclusion language that would fit any assignment rather than explaining this one
- -Treating a client instruction or waiver as authority to narrow the analysis below what credibility requires
Concept Deep Dive
Analysis
Standard 1 sets a performance requirement rather than a checklist, and this item tests whether a candidate understands the difference. Standards Rule 1-4 addresses the approaches in terms of what is necessary for credible assignment results, so the question an appraiser answers is not whether all three were run but whether the ones developed are sufficient for the intended use and intended users. For a tract home in an active subdivision with abundant closed sales of near-identical properties, the sales comparison approach speaks directly to how the market behaves and the other approaches add little: the cost approach on an existing dwelling requires depreciation estimates that are themselves derived from market evidence, and the income approach is unpersuasive where the property type is not typically bought for income. The Scope of Work Rule frames the same judgment from the other direction, measuring acceptability against what intended users of similar assignments expect and what an appraiser's peers would do. The reporting side completes the obligation, since the Standard 2 reporting requirements call for the report to state the exclusion of an approach and the reason for the exclusion, which is what converts a defensible decision into a transparent one.
Background Knowledge
You need to know that Standards Rule 1-4 frames the approaches in terms of what is necessary for credible assignment results rather than requiring all three, and that Standard 2 reporting requirements call for stating the exclusion of an approach and the reason. You should know that the Scope of Work Rule measures acceptability against the expectations of intended users in similar assignments and against peer practice. You also need to know that a client may identify intended use and intended users but cannot waive the appraiser's obligation to produce credible results, and that exclusion explanations should be assignment-specific rather than boilerplate.
Real-World Application
Appraising a fifteen-year-old house in a subdivision of similar homes with twenty-two closed sales in the past six months, an appraiser develops only the sales comparison approach. The report states that the cost approach was excluded because accrued depreciation on a dwelling of this age would have to be derived from the same market evidence already analyzed and would add no independent support, and that the income approach was excluded because properties of this type in this market are purchased for owner occupancy rather than for income, with no meaningful rental market to draw on.
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?
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:
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?
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