Which action is not universally required in every real-property appraisal?
Correct Answer
A) Developing the cost approach
Relevant problem elements must be identified, but every appraisal need not develop the cost approach. Determine necessary research and methods for credible results and explain an applicable exclusion under reporting requirements; no universal mandate requires all three approaches in every assignment.
Why This Is the Correct Answer
Option A is correct because USPAP requires the cost approach only when it is necessary for credible assignment results. If an approach is not developed, the report states the reasons for its exclusion. The other options are elements of problem identification that must be identified in each assignment.
Why the Other Options Are Wrong
Option B: Identifying the client and other intended users
Option B, identifying the client and other intended users, is a required problem-identification step in each appraisal, so it is universally required and not the answer.
Option C: Identifying intended use
Option C, identifying the intended use, is required in each appraisal because the intended use shapes the scope of work needed for credible results.
Option D: Identifying the type and definition of value
Option D, identifying the type and definition of value, is required in each appraisal because the value being developed must be clearly established.
Identify each time, approach as needed
Problem-identification elements are required in each assignment, while the three approaches are tools used when necessary for credible results. Excluded approaches need a stated reason.
How to use: Use this to separate required identification steps from optional valuation methods.
Exam Tip
For a 'not required' question, check whether each option is a problem-identification element or a method; methods depend on necessity for credible results.
Common Mistakes to Avoid
- -Believing all three approaches must be developed in each appraisal
- -Omitting the reason for excluding an approach
- -Treating identification of intended use as optional
Concept Deep Dive
Analysis
This question asks which item is not required in each real property appraisal. Identifying the client and intended users, the intended use, and the type and definition of value are problem-identification steps needed in each assignment. Developing a particular approach, such as the cost approach, depends on whether it is necessary for credible results.
Background Knowledge
Problem identification under USPAP includes the client and intended users, intended use, type and definition of value, effective date, relevant property characteristics, and assignment conditions. The approaches to value are methods selected according to what is necessary for credible results. When an approach is excluded, the reasons are stated in the report.
Real-World Application
An appraiser values a 40-year-old condominium unit where depreciation is hard to measure and buyers do not rely on cost. The appraiser develops the sales comparison approach, excludes the cost approach, and explains in the report why it was not developed.
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