Why can a limiting condition not be used to disclaim required analysis?
Correct Answer
D) Credible results still have to be produced
Why this is correct: A limiting condition defines the boundaries of the appraisal assignment, but it cannot excuse the appraiser from performing the analysis required to produce a credible result. The scope of work must be sufficient to meet that fundamental requirement. Why the other choices are wrong: Limiting conditions must be approved by the client is not a USPAP rule; disclosure is required, but client approval does not override the need for credible results. USPAP prohibits limiting conditions altogether is false; they are a standard part of an appraisal report. Only extraordinary assumptions may limit the work is incorrect; both extraordinary assumptions and limiting conditions can define scope, but neither can excuse a lack of credible analysis. Exam tip: A limiting condition documents the scope; it does not cure an insufficient scope that fails to produce a credible result.
Why This Is the Correct Answer
Why this is correct: A limiting condition defines the boundaries of the appraisal assignment, but it cannot excuse the appraiser from performing the analysis required to produce a credible result. The scope of work must be sufficient to meet that fundamental requirement. Why the other choices are wrong: Limiting conditions must be approved by the client is not a USPAP rule; disclosure is required, but client approval does not override the need for credible results. USPAP prohibits limiting conditions altogether is false; they are a standard part of an appraisal report. Only extraordinary assumptions may limit the work is incorrect; both extraordinary assumptions and limiting conditions can define scope, but neither can excuse a lack of credible analysis. Exam tip: A limiting condition documents the scope; it does not cure an insufficient scope that fails to produce a credible result.
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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