A real estate salesperson, acting solely in a brokerage role, prepares a CMA to help a listing client choose an asking price. Which statement is best?
Correct Answer
C) The brokerage pricing service is not automatically a USPAP appraisal; the role, service and applicable requirements determine what is required.
A brokerage CMA helps with marketing and pricing; it is not automatically an appraisal assignment performed under Standards 1 and 2. Conversely, an appraiser cannot avoid applicable USPAP duties simply by changing a report’s label. Identify the provider’s role, actual service, intended use and governing requirements. A count of sales or an assessed-value reference does not settle that classification.
Why This Is the Correct Answer
Option C is correct because a brokerage pricing service is not automatically a USPAP appraisal; the role, service and applicable requirements determine what is required. USPAP applies when either the service or the appraiser is required by law, regulation or agreement to comply. The number of sales used or a reference to assessed value does not settle the classification.
Why the Other Options Are Wrong
Option A: Using three closed sales automatically makes the CMA a USPAP appraisal report.
Option A says using three closed sales automatically makes the CMA a USPAP appraisal report. The count of sales does not determine whether USPAP applies; role and governing requirements do.
Option B: Including an assessed value makes the CMA satisfy a lender’s appraisal requirement.
Option B says including an assessed value makes the CMA satisfy a lender's appraisal requirement. An assessed value reference does not convert a brokerage pricing service into an appraisal that meets lender requirements.
Option D: Calling a document a CMA exempts an appraiser from USPAP whenever the appraiser uses that label for a pricing opinion prepared for a listing client.
Option D says calling a document a CMA exempts an appraiser from USPAP whenever the appraiser uses that label. An appraiser cannot avoid applicable USPAP duties by changing a report's label.
Role and rules, not labels
Who is doing the work and what rules govern it decide USPAP coverage. The title on the document does not.
How to use: Use this when an answer choice hinges on a report's name, sale count or included data.
Exam Tip
Reject answers that let a label or a count of sales decide USPAP status. Focus on the provider's role, the service and the governing requirements.
Common Mistakes to Avoid
- -Believing any analysis of three sales is a USPAP appraisal
- -Thinking an appraiser can avoid USPAP by calling work a CMA
- -Assuming a CMA can satisfy a lender's appraisal requirement
Concept Deep Dive
Analysis
This question tests when USPAP applies to a pricing opinion. A broker's CMA prepared in a brokerage role is not automatically a USPAP appraisal, but an appraiser cannot escape USPAP simply by labeling a service a CMA. The provider's role, the actual service and the applicable requirements decide what is required.
Background Knowledge
USPAP applies when the service or the appraiser is required by law, regulation or agreement with the client to comply. Licensed real estate agents commonly prepare CMAs to help set list prices as part of brokerage services. When an appraiser performs valuation services, labels such as CMA or evaluation do not remove USPAP obligations.
Real-World Application
A listing agent prepares a CMA showing recent nearby sales so a seller can choose an asking price. Later, a lender needs a collateral valuation and orders an appraisal from a credentialed appraiser. The CMA served marketing purposes and does not replace the lender-required appraisal.
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