Basic Appraisal Principles Exam Questions with 100% Correct Answers

Basic Appraisal Principles Exam Questions with 100% Correct Answers When are appraisers needed? -Answer-to set asking/offering prices, settle estates, refinance, divorce, taxes, rental rates, valuation, condemnation & foreclosure Appraiser -Answer-One who is expected to perform valuation services competently & in a manner that is independent, impartial & objective. Attributes of an Appraiser -Answer-competent, independent, impartial, objective, prompt, organized, educated, honest & diligent Appraiser must be knowledgeable in... -Answer-history, economics, construction, math, statistics, ethics, psychology, sociology, urban planning & land use What are some adversarial situations that require an appraisal? -Answer-tax appeals, relocation, casualty loss, purchase offers, partnership breakups, division of assets, negotiation of leases, condemnation & estate settlements Appraisal Report -Answer-The written or oral communication of an appraisal. Most residential appraisal reports for mortgage lending purposes are completed using a standardized app. report form that is approved by Fannie Mae & Freddie Mac. Narrative Report -Answer-A written report presented in narrative style or "long hand" & are used most for commercial, industrial or income producing properties. What are the 4 components of the real property appraiser qualification criteria? - Answer-1) Continuing Education: 14 class hrs/year + 7hr National USPAP Update Course every 2 years 2) Experience: 3) Examination: successful completion valid for 24 months 4) Qualifying Education: changed in 2008 & 2015, increased classroom hours, college level requirements & minimum classroom hours for specific topic areas or modules. Requirements for a Trainee -Answer--75 classroom hours -no college degree -no prior experience -may have multiple supervisors Requirements for a Licensed Residential Appraiser -Answer--150 classroom hours -30 college hours or associates degree -non-complex one to four residential units with a transaction value less than $1,000,000 & complex units with a value less than $250,000 -2,000 hours experience in no less than 12 months Requirements for a Certified Residential Appraiser -Answer--200 classroom hours -Bachelor's Degree -All one to four residential units without regard to transaction value or complexity -2,500 hours experience in no less than 24 months Requirements for a Certified General Appraiser -Answer--300 classroom hours -Bachelor's Degree -All types of real estate -3,000 hours experience in no less than 30 months of which 1,500 hours must be in non-residential appraisal work Employment Opportunities for Appraisers -Answer--A majority work for themselves or in an office -Most specialize in residential work (mortgage appraisals) -General appraisers specialize in income-producing properties & are more likely to appraise in a widespread area -Banks, accounting firms, real estate investment companies, government agencies, real estate departments of chain stores & attorneys Housing Markets in 1950 -Answer-relatively tranquil with steady growth in housing, a healthy economy & stable interest rates Housing Markets in 1960 -Answer-no established appraisal standards nationwide, but there were professional appraisal organizations providing education programs & touting codes of ethics, membership was optional Housing Markets in 1970 -Answer-turbulent decade, major swings in the economy & housing market lending made at local levels with risk & underwriting determined by local lenders/banks. Late 1970s Fannie & Freddie developed uniform underwriting rules & the first universally accepted appraisal form for home equity lending was Form 704. The end of the 1970s saw record inflation & increased interest rates. Housing Markets in 1980 -Answer-Home sales soared & then tapered off. Appraisers were busy, no generally accepted standards of ethics & performance. Underwriting standards were lax (especially in commercial lending). The situation culminated with the "Saving and Loan Crisis" in the mid-1980s. Known as the Barnard Report for Rep. Douglas Barnard's letter o Congress in 1986. The Development of Appraisal Standards -Answer-In light of the Barnard Report, 8 US based professional organizations plus 1 from Canada for the Ad Hoc Committee on Uniform Standards to develop appraisal standards; their initial focus was on developing a common definition of "market value". In 1987 the 8 US organizations established The Appraisal Foundation. The Appraisal Foundation -Answer--a not-for-profit organization established exclusively for educational & scientific purposes -not a professional appraisal organization or society -membership is reserved for organizations not individuals -is a private entity which has no enforcement authority in any jurisdiction -it has 14 sponsors (appraisal, international appraisal & affiliate sponsors) -4 Principal Boards: Board of Trustees (BOT), Appraisal Standards Board (ASB), Appraiser Qualifications Board (AQB), Appraisal Practices Board (APB) -The Appraisal Foundation & its boards promulgate standards & qualification criteria for the benefit of the public. They were created for the express purpose of promoting & maintaining a high level of public trust & confidence in professional appraisal practice. Board of Trustees (BOT) -Answer--acts as an executive board -composed of 26 individuals responsible for funding TAF & appointing members of the ASB, AQB & APB Appraisal Standards Board (ASB) -Answer-responsible for creating standards of ethics & performance of appraisers, which is accomplished through the Uniform Standards of Professional Appraisal Practice (USPAP), in short ASB is responsible for USPAP Appraiser Qualifications Board (AQB) -Answer-responsible for creating requirements for licensure, certification & re-certification of appraisers Appraisal Practices Board (APB) -Answer-formed in 2010 it is responsible for issuing voluntary guidance on recognized valuation methods & techniques. Uniform Standards of Professional Appraisal Practice (USPAP) -Answer--developed by an Ad Hoc Committee in 1986/7 & was copyrighted in 1987 by The Appraisal Foundation -January 1989 ASB adopted USPAP as the governing doc