Under USPAP Standards Rule 1-4, what must an appraiser do in developing any real property appraisal?
Correct Answer
C) Collect, verify and analyze the information credibility needs
SR 1-4 requires the appraiser to collect, verify and analyze all information necessary for credible assignment results. It does not require all three approaches, comparable inspections or a fixed sale age.
Why This Is the Correct Answer
Option C is correct because Standards Rule 1-4 states that in developing a real property appraisal, an appraiser must collect, verify and analyze all information necessary for credible assignment results. The required information depends on the assignment. Credibility, not a fixed checklist, drives what must be done.
Why the Other Options Are Wrong
Option A: Develop all three approaches to value in each appraisal
Option A, developing all three approaches in each appraisal, is wrong because SR 1-4 does not require all three approaches in every assignment. The approaches needed depend on what is necessary for credible results.
Option B: Inspect each comparable sale in person before using it
Option B, inspecting each comparable sale in person, is wrong because SR 1-4 does not require personal inspection of comparables. It requires the information necessary for credible results, which can be gathered in other ways.
Option D: Use sales that closed within the last six months and no others
Option D, using only sales that closed within the last six months, is wrong because SR 1-4 sets no fixed sale-age limit. The appraiser uses the data needed for credible results, adjusting for market conditions where supported.
Collect, verify, analyze
SR 1-4 boils down to three verbs: collect, verify and analyze what credibility needs.
How to use: Use this to spot the USPAP-based answer among choices that add fixed rules.
Exam Tip
USPAP is mostly performance based; be cautious with choices that add fixed requirements such as specific sale ages or mandatory inspections.
Common Mistakes to Avoid
- -Believing USPAP requires all three approaches in every report
- -Believing USPAP requires inspecting every comparable
- -Applying a fixed sale-age rule as a USPAP requirement
Concept Deep Dive
Analysis
This question tests the core requirement of USPAP Standards Rule 1-4 for real property appraisals. The rule requires collecting, verifying and analyzing all information necessary for credible assignment results. It does not prescribe specific approaches, inspections or sale-age limits.
Background Knowledge
USPAP Standard 1 governs the development of real property appraisals. Standards Rule 1-4 covers the collection and analysis of data for each approach the appraiser uses. Its central test is that the information gathered and analyzed must be enough for credible assignment results.
Real-World Application
An appraiser in a slow rural market finds few recent sales and must use some older ones. Under SR 1-4, the appraiser collects all relevant data, verifies key sales with the parties and analyzes market conditions to adjust the older sales. The work is driven by what credible results require rather than a fixed age limit.
More Sales Comparison Questions
Supported adjustments are: non-market financing $10,000, GLA $36/sf, garage $3,500 per car, pool/spa $12,500. A comparable identical to the 2,800 sf subject sold for $267,000 with non-market financing. What is its adjusted price?
Using GLA $36/sf and non-market financing $10,000: a 3,100 sf comparable sold for $277,000 with non-market financing; the subject has 2,800 sf. Bath count differences are not adjusted. What is the adjusted price?
Using garage $3,500 per car and pool/spa $12,500: a comparable with a 2-car garage and a pool/spa sold for $268,000. The subject has a 3-car garage and no pool. What is the adjusted price?
Using GLA $36/sf, garage $3,500 per car and pool/spa $12,500: a 2,600 sf comparable with a 2-car garage and a pool/spa sold for $264,000. The subject is 2,800 sf with a 3-car garage and no pool. What is the adjusted price?
In a neighborhood with declining values and marketing times over six months, what must Fannie Mae lenders confirm about the sales comparison analysis?
A house is a 4,000 square foot home in an area of 2,000 square foot homes. How must the appraiser treat this over-improvement in the sales comparison grid?
According to the Interagency Appraisal and Evaluation Guidelines, which items should an appraisal’s market conditions discussion include?
A comparable listed at $420,000 and sold for $399,000. What sale-to-list price ratio (sale price ÷ list price) does this indicate?
An appraiser wants to describe the neighborhood boundaries in a Fannie Mae report. Which approach is acceptable?
Which of these is listed by Fannie Mae as a sales or financing concession?
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