Progress Exam 09 Emerging Appraisal Methods
Large National Bank engages an appraiser to value a property because the borrower is in default on their mortgage. The bank informs the appraiser that they are restricted to inspecting the property from the street only, because they do not want the appraiser to contact the occupant/borrower. This inspection limitation is best described as an:
Assignment condition
An appraiser is researching and analyzing data for completing a hybrid appraisal for the intended use of making a mortgage lending decision. As part of this process, the appraiser is comparing and contrasting data that they have gathered from the following sources: the borrower, the property data collector, and the municipal assessor. Of these three sources, which should be considered the least trustworthy?
Borrower
Ashley, a certified general appraiser, is completing a hybrid appraisal on a single-unit residence. In connection with the assignment, Bob, a real estate agent, completes an interior and exterior inspection of the subject property and provides property information and multiple photographs of the interior of the dwelling to Ashley. In her appraisal report, Ashley would disclose the level of her personal inspection as:
Did not inspect the subject property
An appraiser purchases a program that performs multiple regression analysis and plans to use it as a tool in performing appraisals. In which type of neighborhood would this tool provide the most reliable conclusions?
A large homogenous development
An appraiser is completing an appraisal on a residential property and wants to use a computer-assisted valuation tool to extract and support the adjustments that will be used in the sales comparison approach. Which of these is not a program that can be used to extract and support adjustments?
A rule of thumb that the appraiser obtained via an online search
A potential client, a residential mortgage lender, requests that an appraiser perform an appraisal without making a physical inspection of the subject property. The appraiser is considering whether or not to agree to perform this assignment. Which statement is true regarding this situation?
An appraiser is permitted under USPAP to appraise a property without inspecting it.
An appraiser agrees to perform an appraisal assignment for a mortgage lender. The lender does not permit the appraiser to make a physical inspection of the subject property; instead, the appraiser is asked to obtain information regarding the subject property's physical characteristics from public records and the local multiple listing service (MLS). The appraiser looks up the property in the public records but finds there is insufficient information about the size, quality, and condition of the improvements. The property has never been listed in the MLS. What should the appraiser do?
Contact the client and ask to modify the scope of work to include gathering the necessary information
An appraiser is using a scanner application ("app") on their smartphone to inspect and measure a single-unit detached dwelling. In addition to measuring the dwelling, a scanner app can also:
Create a detailed floor plan sketch
An appraiser purchases a computer-assisted valuation tool that is intended to help the appraiser extract and support adjustments in the sales comparison approach. What does the appraiser need to do, in accordance with USPAP, in order to use this tool in an appraisal of a single-unit residence?
Describe the overall process and verify that the tool produces results that reflect market behavior
When analyzing sales data, appraisers often perform regression analysis. At its core, the primary goal of regression analysis is to:
Examine the relationships between variables
Jill, a certified appraiser, is completing a hybrid appraisal that populates suggested adjustments based on a multiple linear regression tool. If Jill uses these adjustments in an appraisal, she must:
Have a basic understanding of statistics and regression analysis
There has been a lot of talk about "hybrid" and "desktop" appraisal assignments as emerging appraisal methods. Which statement is true regarding these types of assignments?
In both of these assignment types, the value conclusion is developed by an appraiser.
An appraiser is valuing a multi-unit affordable housing property. In valuing the property, the client requires the appraiser to use a discounted cash flow (DCF) program that is proprietary to the client. The assumptions and discount rate built into the program are not extracted from the market; instead, they are based on the client's risk parameters. What type of value is being developed in this assignment?
Investment value
An appraiser is engaged to complete an appraisal assignment for a client. The client provides the appraiser with the output of an automated valuation model (AVM) and requires the appraiser to use this AVM output in developing the appraiser's own value opinion. In order to use this AVM output in developing the appraisal, the appraiser must:
Learn, generally, how the AVM works
An appraiser purchases a program to analyze real property sales data. This program studies the relationship between three or more variables and uses the conclusions obtained through this analysis to provide estimates of adjustment amounts that can be used in the sales comparison approach. What type of function is this program performing?
Multiple regression analysis
An automated valuation model (AVM) is being used by an appraiser in an assignment. The AVMs internal processes are most likely to include:
Multiple regression analysis
An appraiser is performing research on a subject property using geographic information system (GIS) mapping. Which of the following would the appraiser be LEAST likely to obtain from this source?
Names of prior owners of the property
Eric, a real estate agent, completes an interior and exterior inspection of the subject property and forwards his observations on a property condition report to Missy, a certified residential appraiser. Missy prepares an appraisal on the property. In the certification of her appraisal report, is Missy required to identify Eric as providing significant assistance?
No, because Eric is not an appraiser
An appraiser is using a computer-assisted valuation tool, a commercially available regression analysis program, in performing an appraisal review. The reviewer had recently purchased this tool and has not yet had time to learn exactly how it works. The reviewer simply inputs a number of sales from the MLS into the program and it produces a probable value range for the subject. The reviewer uses this probable value range to impugn the original appraiser's value conclusion. Is the reviewer correct in the use of this tool in developing the appraisal review?
No, because the reviewer does not understand how the program works
Appraiser A is valuing a property and makes an interior and exterior inspection of the subject property to obtain information about its physical characteristics. Appraiser B is valuing the property next door and is relying on a third party's observations about the subject property's physical characteristics. With regard to the physical characteristics, Appraiser A is relying on ________ data, while Appraiser B is relying on __________ data.
Primary, secondary
An appraiser is valuing a single-unit residence. As part of the appraisal process, the appraiser conducts a study of two variables, square footage and sale price. The appraiser's goal is to analyze a large number of sales with the aid of a computer program to determine if there is a relationship between an improved property's sale price and its square footage. What is this type of analysis called?
Regression analysis
A mortgage lender engages an appraiser to value a residential property. The lender asks the appraiser to make a personal inspection of the subject property. What is the most likely reason why the lender would want the appraiser to inspect the property?
So the appraiser can gather information about the property's relevant characteristics
An appraiser purchases a measuring application ("app") for a smartphone. The app can be is used by the appraiser during the subject property inspection; the app will measure the dwelling, calculate the gross living area (GLA), and produce a floor plan sketch. Which statement is true regarding the use of this app?
The appraiser is responsible for the accuracy of the measurements and the calculations of GLA.
An appraiser is valuing an income-producing property using discounted cash flow (DCF) analysis. The appraiser is using a commercial software program in developing this analysis. Which statement is true regarding the appraiser's responsibilities in preparing the appraisal report for the assignment?
The appraiser should cite the name and version of the software in the appraisal report.
An appraiser is performing a hybrid appraisal on a single-unit residence. A non-appraiser makes an interior and exterior inspection of the subject property and provides a property condition report to the appraiser. The appraiser is asked to develop a market value opinion and report the appraisal on a standardized form that was created by the client. In completing this appraisal, the appraiser should primarily focus on:
The characteristics of the property that are relevant to its valuation
An appraiser is using online aerial imagery to obtain information about a property's physical characteristics. Which of these is the most important consideration for the appraiser?
The date the image was captured
An appraiser is applying statistical analysis in determining which unit of comparison to use in an appraisal of a small income property. The appraiser examines several different units of comparison and determines the coefficient of variation (COV) for each. Which unit of comparison would be the best indicator of value?
The one with the lowest COV
An appraiser is using a software program to perform discounted cash flow (DCF) analysis in an appraisal of an income-producing property. The appraiser will need to make several assumptions in using DCF, including appreciation rates, absorption rates, rental rates, expense trends, and discount rates. Which statement is true regarding the disclosure of these assumptions in the appraisal report?
These assumptions must clearly and accurately be disclosed in the appraisal report.
An appraiser is valuing a residential property but did not make a personal inspection of the property. Two data sources for room count and gross living area were provided to the appraiser, but there is a sizeable discrepancy between two sources of data. The appraiser researches additional data sources in an effort to validate the data through cross verification from more than two sources. What is this process known as?
Triangulation
An appraiser is using linear regression in an appraisal assignment and is analyzing three different variables. The coefficient of determination for Variable A is 0.35. The coefficient of determination for Variable B is 0.85. The coefficient of determination for Variable C is 0.56. Which variable indicates the best fit of the regression line to the data?
Variable B
An appraiser is developing an appraisal for a client, a mortgage lender. The client has provided the appraiser the output of an AVM program and requires the appraiser to use that information, and nothing else, in developing the opinion of value. The appraiser understands how the AVM works but concludes that the AVM output is not credible for the intended use. The client will not permit the appraiser to modify the scope of work for the assignment. What should the appraiser do?
Withdraw from the assignment
An appraiser is asked by a potential client, a mortgage lender, to complete an appraisal on a single-unit residence that is under contract for purchase. The client instructs the appraiser not to inspect the subject property, but instead to use information from public records and the MLS to obtain information about the subject property's physical characteristics. Is the scope of work of this appraisal permissible under USPAP?
Yes, as long as credible assignment results can be produced
An appraiser is using an automated valuation model (AVM) as a tool in valuing a residential property in a state where appraisers are required by law to comply with USPAP when performing appraisals. Must the appraiser comply with USPAP when using the AVM to develop a value conclusion?
Yes, because the appraiser is using the AVM as a tool in developing an appraisal