Which Standards Rule requires an appraiser to identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal?
Correct Answer
A) Standards Rule 1-2
SR 1-2(e) requires identifying property characteristics relevant to the type and definition of value and intended use. SR 1-2(a) concerns the client and other intended users. SR 1-3 addresses relevant use/regulatory and economic considerations and highest and best use when necessary; SR 1-4 addresses approach-specific and other analyses; SR 1-5 subject agreements and transfer history; SR 1-6 reconciliation. Relevant characteristics may be established through suitable sources, not only personal observation.
Why This Is the Correct Answer
Option A is correct because SR 1-2(e) requires the appraiser to identify, from sources the appraiser reasonably believes to be reliable, the characteristics of the property that are relevant to the type and definition of value and intended use. These include location and physical, legal, and economic characteristics. Identifying characteristics is part of problem identification in SR 1-2.
Why the Other Options Are Wrong
Option B: Standards Rule 1-3
Option B, Standards Rule 1-3, addresses relevant use, regulatory, and economic considerations and highest and best use when necessary. It does not contain the requirement to identify the relevant property characteristics.
Option C: Standards Rule 1-4
Option C, Standards Rule 1-4, addresses the analysis within the approaches to value and related analyses. It applies the approaches rather than identifying the property characteristics.
Option D: Standards Rule 1-5
Option D, Standards Rule 1-5, addresses the subject's current agreements, options, listings, and prior sales and transfers. It does not require identification of relevant property characteristics.
Two identifies, four applies
SR 1-2 identifies the problem, including client, users, use, value, date, and property characteristics; later rules analyze, apply, and reconcile.
How to use: Use this sequence to place any Standard 1 requirement in its rule number.
Exam Tip
If a requirement begins with identify, it usually belongs in SR 1-2's problem identification list.
Common Mistakes to Avoid
- -Placing property characteristics under SR 1-3 because it discusses use
- -Assuming characteristics must come only from personal inspection
- -Confusing SR 1-4 approach analysis with problem identification
Concept Deep Dive
Analysis
This question tests your knowledge of which part of Standard 1 contains the requirement to identify relevant property characteristics. That requirement sits in SR 1-2, the problem identification rule, specifically SR 1-2(e). Knowing the general subject of each rule from 1-2 through 1-6 lets you eliminate the rest.
Background Knowledge
Standard 1 moves from problem identification (SR 1-2) to market analysis and highest and best use (SR 1-3), approach-specific analysis (SR 1-4), subject sales history (SR 1-5), and reconciliation (SR 1-6). Relevant characteristics may be identified from reliable sources, not only from personal observation.
Real-World Application
Before choosing comparables for a rural property, an appraiser uses county records and a site visit to identify the site size, legal access, zoning, and improvements. That identification step falls under SR 1-2(e).
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