The subject is under contract on the effective date. What does Standard 1 require of the appraiser?
Correct Answer
B) That the contract be analyzed as part of the work
Why this is correct: USPAP Standards Rule 1-5 requires the appraiser to analyze any current agreement of sale, option, or listing as of the effective date. This analysis is part of considering all relevant market data. Why the other choices are wrong: "That the contract price be adopted as the value" is incorrect; the contract is evidence, not conclusive value. "That the contract be excluded to preserve neutrality" violates the standard. "That the buyer be added as an intended user" is not required by analyzing the contract. Exam tip: Analyze all current contracts, but do not assume they reflect market value.
Why This Is the Correct Answer
Why this is correct: USPAP Standards Rule 1-5 requires the appraiser to analyze any current agreement of sale, option, or listing as of the effective date. This analysis is part of considering all relevant market data. Why the other choices are wrong: "That the contract price be adopted as the value" is incorrect; the contract is evidence, not conclusive value. "That the contract be excluded to preserve neutrality" violates the standard. "That the buyer be added as an intended user" is not required by analyzing the contract. Exam tip: Analyze all current contracts, but do not assume they reflect market value.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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Previous Question
Site value is indicated at $118,000 by sales comparison drawn from six sales, $109,000 by extraction from two sales, and $124,000 by allocation using a market ratio. Which indication deserves the most weight?
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The approaches indicate $398,000, $412,000 and $438,000. What is the range of the indications?