In developing an appraisal, an appraiser may not base the analysis or conclusion on:
Correct Answer
A) Race, color, religion, sex, age, national origin, disability or familial status
Why this is correct: The Ethics Rule prohibits basing an analysis or conclusion on prohibited discriminatory factors (race, color, religion, etc.). Value must derive from property and market characteristics. Why the other choices are wrong: "The observed condition of the improvements" is a proper basis. "The neighborhood's documented employment and income trends" are legitimate market data. "Verified sales of competing properties" are the core of the sales comparison approach. Exam tip: Never let demographic characteristics of owners or occupants influence your value opinion.
Why This Is the Correct Answer
USPAP prohibits basing an appraisal on race, colour, religion, sex, age, national origin, disability, familial status or other protected characteristics, whether directly or through proxies.
Why the Other Options Are Wrong
Option B: The observed condition of the improvements as of the assignment effective date
Observed condition of the improvements as of the effective date is a core appraisal input and entirely proper.
Option C: The neighborhood's documented employment and income trends
Documented employment and income trends are economic market forces, distinct from the demographic composition of residents.
Option D: Verified sales of competing properties within the market area
Verified sales of competing properties are the foundation of the sales comparison approach.
Market Forces, Not People
Market Forces, Not People. Employment trends are analysis; who lives there is not.
How to use: Test each statement: does it describe an economic or physical force, or the characteristics of residents?
Exam Tip
Proxies count. Comparable selection tracking demographic lines rather than physical similarity offends the rule without any explicit statement.
Common Mistakes to Avoid
- -Describing neighbourhood demographics as market analysis
- -Selecting comparables along demographic rather than physical lines
- -Assuming the rule reaches only explicit statements
Concept Deep Dive
Analysis
USPAP's Ethics Rule prohibits an appraiser from developing an appraisal based on a supported opinion of value premised on race, colour, religion, sex, age, marital status, familial status, national origin, disability, or any other legally protected characteristic — of the property's owners, occupants, or of the present or prospective occupants of the surrounding area. The prohibition reaches both direct use and indirect proxies, which is the harder part in practice: descriptions of a neighbourhood's demographic composition, references to who lives there, or comparable selection patterns that follow demographic lines rather than physical and locational similarity all offend the rule even where no explicit statement appears. What remains entirely proper is the analysis of market forces: employment and income trends, condition of improvements, verified sales, and every other economic and physical characteristic that actually drives value. The three wrong answers all describe legitimate appraisal inputs, which is the point — the rule prohibits protected characteristics, not market analysis.
Background Knowledge
USPAP's Ethics Rule prohibits appraisals based on protected characteristics of owners, occupants or prospective occupants of the surrounding area. Analysis of economic and physical market forces remains proper.
Real-World Application
An appraiser describes a market area by employment base, income levels, housing stock and price trends, without reference to the composition of its residents.
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?
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:
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:
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