For a market-value appraisal, what must be identified about the value basis under SR 1-2(c)?
Correct Answer
B) Its type and definition, and cash, cash-equivalent or other terms
Identify the type and definition of value, and ascertain whether the value is to be the most probable price in terms of cash, financial arrangements equivalent to cash, or other precisely defined terms. Citing the source of the value definition is a separate reporting matter, not part of SR 1-2(c). These terms affect the comparison basis and cannot be replaced by a bare dollar conclusion.
Why This Is the Correct Answer
Option B is correct because SR 1-2(c) requires identifying the type and definition of value and ascertaining whether the value is the most probable price in terms of cash, in financial arrangements equivalent to cash, or in other precisely defined terms. These terms set the comparison basis for the analysis.
Why the Other Options Are Wrong
Option A: The final dollar figure that the appraisal report concludes
Option A identifies the final dollar figure the report concludes. The final value is the result of the analysis, not the value basis identified at the start under SR 1-2(c).
Option C: Any extraordinary assumption the client has requested, nothing more
Option C limits identification to any extraordinary assumption the client requests, nothing more. Extraordinary assumptions are identified under a separate part of SR 1-2 and do not replace the type, definition and financing terms of value.
Option D: The loan amount that the client is hoping to support
Option D identifies the loan amount the client hopes to support. A target loan amount is not part of the value basis, and developing a value to meet a target would compromise independence.
Type, definition, then financing terms
Under SR 1-2(c), name what value it is, how it is defined, and whether it is stated in cash, cash-equivalent or other precisely defined terms.
How to use: Use this three-part checklist when a question asks what SR 1-2(c) requires.
Exam Tip
Separate what is identified at the start of an assignment from the results of the analysis.
Common Mistakes to Avoid
- -Confusing the value definition with the final value conclusion
- -Ignoring whether value is stated in cash-equivalent terms
- -Treating the client's target loan amount as part of the value basis
Concept Deep Dive
Analysis
This question tests the value identification requirement in SR 1-2(c). The appraiser must identify the type and definition of value and ascertain whether the value is the most probable price in cash, cash-equivalent financing or other precisely defined terms. These items define the basis of value before analysis starts.
Background Knowledge
Problem identification under SR 1-2 includes the client and intended users, intended use, type and definition of value, effective date, relevant characteristics, and assignment conditions. For market value, the financing terms matter because sales with non-market financing may need adjustment. Citing where the value definition comes from is handled when the report is written.
Real-World Application
For a mortgage assignment, an appraiser identifies market value as the type of value, adopts the definition used by the client, and confirms that value is stated in terms of cash or financing equivalent to cash. When a comparable involved seller-paid concessions, she considers whether adjustment is needed to match that basis.
More USPAP Questions
Under USPAP, what are assignment results?
The certification required by Standards Rule 2-3 must be signed by:
Under 2024 USPAP, which statement correctly combines the requirements for an oral real property appraisal report and its workfile?
An appraiser accepts an assignment involving a property type the appraiser has valued once before, years ago. Competency requires:
A Certified General appraiser is asked to value a specialized industrial property for the first time. The appraiser knows a competency gap exists before agreeing to the assignment. What is required if the appraiser proceeds?
Under 2024 USPAP Standard 1, which listed assignment element must be identified in developing a real property appraisal?
An appraiser provided an appraisal of the same property for another client 18 months ago. No confidentiality obligation prevents disclosing the fact of that service. Before agreeing to a new assignment, the appraiser must:
According to USPAP, what is the primary purpose of the Ethics Rule?
An appraiser is asked to determine 'fair market value' for an assignment. According to USPAP, the appraiser should:
Which list gives the sections of the 2024 USPAP Ethics Rule?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam