What governs which approaches an appraiser develops?
Correct Answer
C) Which approaches and methods are necessary for credible assignment results
Develop the approaches necessary for credible results and use appropriate recognized methods. Neither a shorter requested report nor a restricted option permits omitting necessary development. Standard 2 reporting and workfile obligations remain separate.
Why This Is the Correct Answer
Option C is correct because USPAP ties the development of each approach to what is necessary for credible assignment results. Standards Rule 1-4 frames each approach in terms of when it is necessary, for example when a cost approach is necessary for credible assignment results. The appraiser therefore develops the approaches and recognized methods the problem requires.
Why the Other Options Are Wrong
Option A: Which approach produces the value the client wants to see in the report
Option A lets the value the client wants to see drive the choice of approach. That is result-driven work that undermines impartiality; approaches are chosen for credibility, not to reach a desired number.
Option B: One approach, chosen before the evidence is reviewed
Option B picks one approach before the evidence is reviewed. The decision about which approaches are necessary depends on the assignment and the data, so choosing in advance skips the analysis that determines what credible results require.
Option D: All three approaches, whether or not each is relevant
Option D requires all three approaches whether or not each is relevant. USPAP does not require all three approaches in each assignment; an approach that is not necessary for credible results need not be developed, though its exclusion must be explained in the report.
Necessity Picks the Approach
Ask of each approach: is it necessary for a credible result here? If yes, develop it; if no, explain why it was excluded.
How to use: Use this question whenever an exam item asks which approaches must be developed.
Exam Tip
When answer choices mention client preference, a preset count of approaches or a decision made before reviewing the data, look for the choice tied to credible assignment results.
Common Mistakes to Avoid
- -Believing USPAP requires all three approaches in every assignment
- -Selecting the approach that best supports the contract price
- -Deciding on the approach before looking at the available market data
Concept Deep Dive
Analysis
This question tests what decides which approaches to value an appraiser develops. Under Standards Rule 1-4, the appraiser must collect, verify and analyze all information necessary for credible assignment results, and an approach is developed when it is necessary for that credibility. The deciding factor is the assignment problem and the evidence, not client preference, habit or a fixed formula.
Background Knowledge
The three traditional approaches are sales comparison, cost and income. USPAP does not prescribe a fixed number of approaches; it requires the appraiser to determine which approaches and methods are necessary for credible results given the property, the market and the intended use.
Real-World Application
An appraiser values an owner-occupied single-family home in an active subdivision with many recent sales and little rental activity. She develops the sales comparison approach, finds the cost approach adds little for this older home, and explains in the report why the cost and income approaches were not developed.
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?
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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?
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