An appraiser wishes to report the conclusion as a range rather than a single figure. This is:
Correct Answer
B) Permitted when appropriate to the assignment and clearly communicated
Why this is correct: USPAP does not require a single-point estimate. A value range (or other expression like 'not less than') is permitted if it is appropriate for the assignment and is clearly communicated so intended users understand the conclusion. Why the other choices are wrong: 'Prohibited, since a single point value is required in written reports' is false. 'Permitted for litigation assignments, but not for lending assignments' is incorrect; a range can be used in various assignments, including lending. 'Required whenever more than two approaches to value were developed' is wrong; reconciliation of approaches does not mandate a range. Exam tip: You can report a range. Just ensure it's clearly explained and appropriate.
Why This Is the Correct Answer
Option B is correct because USPAP says an appraisal is numerically expressed as a specific amount, as a range of numbers, or as a relationship to a previous value opinion or benchmark. A range is permitted when it is appropriate for the assignment and clearly communicated so intended users understand the conclusion.
Why the Other Options Are Wrong
Option A: Prohibited, since a single point value is required in written reports
Option A, saying ranges are prohibited because a single point value is required in written reports, is wrong because USPAP expressly allows a range of numbers.
Option C: Permitted for litigation assignments, but not for lending assignments
Option C, permitting ranges for litigation but not for lending assignments, is wrong because USPAP does not limit ranges by assignment type; a range can be used in various assignments when appropriate.
Option D: Required whenever more than two approaches to value were developed
Option D, requiring a range whenever more than two approaches were developed, is wrong because the number of approaches does not mandate a range; reconciliation can lead to a point value.
Point, range, or relationship
USPAP allows three numeric forms for an appraisal: a point, a range, or a relationship to a benchmark.
How to use: Use point-range-relationship to reject answers that forbid ranges.
Exam Tip
A range is acceptable under USPAP when appropriate and clearly explained; be wary of answers that limit it to certain assignment types.
Common Mistakes to Avoid
- -Believing USPAP requires a single point value
- -Thinking ranges are allowed only in litigation
- -Linking the number of approaches to a required range
Concept Deep Dive
Analysis
This question tests whether USPAP allows a value conclusion expressed as a range. USPAP states an appraisal may be expressed as a specific amount, a range of numbers, or a relationship to a benchmark. The range must suit the assignment and be clearly communicated.
Background Knowledge
USPAP defines an appraisal as an opinion of value and allows it to be expressed as a point, a range, or a relationship such as not more than or not less than a benchmark. Client and assignment needs may favor a point value, but USPAP itself does not require one.
Real-World Application
An attorney needs a preliminary sense of value for settlement talks. The appraiser, finding a range appropriate for that use, reports a value range and explains clearly what it means.
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