What is the minimum transaction threshold for requiring a state licensed or certified appraiser under Title XI for most federally related transactions?
Correct Answer
B) $250,000
Title XI requires a state licensed or certified appraiser for federally related transactions of $250,000 or more. Below this threshold, an evaluation may be sufficient depending on the institution's policies.
Why This Is the Correct Answer
The $250,000 threshold is established by federal regulation under Title XI and applies to most federally related transactions including those involving federally insured financial institutions. This amount was set to ensure that significant real estate transactions receive proper professional appraisal oversight while allowing flexibility for smaller transactions. The threshold applies to the transaction amount, not the property value, and has remained at $250,000 since being established in federal regulations.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 was a threshold used in earlier versions of the regulations but is no longer the current standard for requiring licensed or certified appraisers
Option C: $400,000
$400,000 exceeds the actual threshold and would unnecessarily exclude many transactions that require professional appraisal services under current federal law
Option D: $1,000,000
$1,000,000 is far too high and would eliminate the vast majority of transactions from professional appraisal requirements, contrary to the intent of Title XI
Quarter Million Rule
Remember 'Quarter Million = Quarter of a Million = $250,000' - when you hit a quarter million dollars, you need a qualified appraiser
How to use: When you see threshold questions, immediately think 'Quarter Million' and look for $250,000 in the answer choices
Exam Tip
Don't confuse this with other real estate thresholds - focus specifically on Title XI and federally related transactions when you see $250,000
Common Mistakes to Avoid
- -Confusing this threshold with other regulatory thresholds in real estate
- -Thinking the threshold applies to property value rather than transaction amount
- -Mixing up current thresholds with historical amounts that are no longer in effect
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) establishes federal standards for real estate appraisals used in federally related transactions. The law sets specific dollar thresholds that determine when a state licensed or certified appraiser must be used versus when alternative valuation methods may be acceptable. This threshold system balances the need for professional appraisal standards with cost-effectiveness for smaller transactions. Understanding these thresholds is crucial for appraisers as it defines the scope of transactions requiring their professional services.
Background Knowledge
Title XI was enacted as part of FIRREA in 1989 following the savings and loan crisis to establish uniform standards for real estate appraisals in federally related transactions. The law requires that appraisals be performed by state licensed or certified appraisers and meet Uniform Standards of Professional Appraisal Practice (USPAP) requirements.
Real-World Application
A bank is making a commercial loan secured by real estate for $300,000. Since this exceeds the $250,000 Title XI threshold, the bank must obtain an appraisal from a state licensed or certified appraiser rather than using an internal evaluation or broker price opinion.
More Report Writing Questions
Under FIRREA, which federal agency has the authority to set minimum standards for real estate appraisals in federally related transactions?
The Dodd-Frank Act established which requirement specifically related to appraisal independence?
Which of the following is NOT a responsibility of the Appraisal Subcommittee (ASC)?
State appraiser regulatory agencies are primarily responsible for which of the following functions?
According to USPAP Standard 2, which of the following must be included in every appraisal report?
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Previous Question
A federally related transaction involves a refinance of a single-family home with a loan amount of $180,000. Which of the following is required under Title XI?
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An appraiser is asked to perform an appraisal where the fee will be contingent upon the property appraising for at least the contract price. According to AIR, this arrangement is: