Why must a report identify any real property interest that is being excluded from the value opinion?
Correct Answer
D) The reader must know what the figure does not cover
Why this is correct: The appraisal report must clearly state what property interest is being appraised. If any component of the real property is excluded (e.g., mineral rights, timber, fixtures), this must be disclosed so the reader understands the scope and limitations of the value opinion. Why the other choices are wrong: "Excluded interests must be valued in an addendum" is not required; they are simply excluded. "Exclusions determine the report option required" confuses report content with report format. "Exclusions must be approved by the intended users" is not a USPAP requirement. Exam tip: Disclose exclusions to define the bundle of rights being valued.
Why This Is the Correct Answer
Why this is correct: The appraisal report must clearly state what property interest is being appraised. If any component of the real property is excluded (e.g., mineral rights, timber, fixtures), this must be disclosed so the reader understands the scope and limitations of the value opinion. Why the other choices are wrong: "Excluded interests must be valued in an addendum" is not required; they are simply excluded. "Exclusions determine the report option required" confuses report content with report format. "Exclusions must be approved by the intended users" is not a USPAP requirement. Exam tip: Disclose exclusions to define the bundle of rights being valued.
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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